* Amazon, Barnes & Noble lower prices
* Underscores intensifying e-reader competition
* Barnes & Noble shares down 3.2 pct; Amazon down 2.6 pct
(Adds market data, background)
By Carolina Madrid and Phil Wahba
LOS ANGELES/NEW YORK, June 21 Amazon.com Inc
(AMZN.O) and Barnes & Noble Inc (BKS.N) reduced prices of their
electronic readers on Monday, responding to the threat from
Apple Inc's (AAPL.O) iPad tablet computer.
Shares in both companies fell about 3 percent as investors
feared intense competition could lure away buyers of e-books,
the fastest-growing segment in a moribund bookselling
Profit margins on Barnes & Noble's Nook and Amazon's Kindle
are estimated by analysts to be relatively modest, but the
devices are important to attracting book buyers.
Apple's iPad, launched in April, can also function as an
e-reader. It sold more than 2 million units in its first 60
days and its own e-bookstore has quickly won market share.
That has put pressure on Kindle and Nook, said Mike Souers,
a Standard and Poor's analyst.
Barnes & Noble, which has faced sales declines at its
physical bookstores for several quarters, is betting on the
growth of the e-book market. In March, Barnes & Noble named
William Lynch, who oversaw the development and launch of Nook,
its chief executive officer. [ID:nSGE62H0GV]
During the 2009 Christmas holiday quarter, comparable sales
at Barnes & Noble's physical stores fell 5.5 percent. The
bookseller is set to report fourth quarter earnings next week.
MORE NEW ENTRANTS, BUSIER MARKET
In addition to the iPad, the Nook and Kindle also compete
with Sony Corp's (6758.T) Reader device. Industry experts and
rivals say the field will get even busier, with more e-readers
expected by year-end, including one by Kobo Inc.
Borders Group Inc BGP.N, the No.2 U.S. specialty
bookseller behind Barnes & Noble, plans to launch an
e-bookstore in coming weeks that is compatible with most
devices but opted not to develop its own e-reader, citing a
slew of new entrants, falling prices for the devices and the
high costs behind developing a device. [ID:nN27121145]
In a research note in April, Goldman Sachs forecast that
U.S. sales of e-books would rise by 47 percent per year to
reach $3.2 billion by 2015, or 12.8 percent of total book
sales, up from 3 percent this year. Goldman forecast physical
book sales to slip 1 percent per year over that period.
Goldman also forecast that Apple's share of the e-book
market would jump to 33 percent in 2015 from 10 percent this
year, while Amazon's market share would plummet to 28 percent
from 50 percent. Barnes & Noble is expected to snag 15 percent
of e-book sales in five years, up from 5 percent in 2010.
Some analysts say dedicated e-readers such as Nook and
Kindle are appealing because they consume less power, are
easier to read on, and weigh less.
Charles Wolf, an analyst with Needham and Co, said
e-readers -- despite being "primitive" when compared with the
likes of the iPad -- will keep a core audience.
Amazon announced its $70 price cut to $189 hours after
Barnes & Noble lowered the price on its own 3G compatible
"Nook" to $199. Both had cost $259.
Barnes & Noble also introduced a new Wi-Fi-only version of
the Nook for $149.
Barnes & Noble introduced Nook in October. The company is
set to report its fourth-quarter earnings next Monday.
The first version of the Kindle sold for $399 in November
2007 when it was launched.
Shares in Amazon closed down 2.6 percent at $122.55, while
Barnes and Noble stock finished down 3.2 percent at $16.53.
(Editing by Edwin Chan, Carol Bishopric and Bernard Orr)