Earlier today we saw the official announcement of the WiFi only Nook and the price drop of the existing Nook to $199. Now Amazon is announcing that its own Kindle is dropping, too. This drop is a bit more substantial, down from $259 to $189. Amazon isn't saying what sparked the price drop, but we can only assume it has to do with increased competition, especially the Nook's latest moves.
I have to say that at $189 for the Kindle and $199 for the Nook, there's really no reason to look at competitors right now. The closest competitor in the space is probably the new WiFi Nook for $149, but that still keeps it in the B&N family.
The biggest barrier to entry is still consumer adoption. Do consumers feel a need to buy into the eBook concept? For $149 for the hardware and a solid eBook store, the barrier just became a lot easier to overcome.
Matthew's opinion: I just wanted to chime in with my 2 cents regarding these two devices that are now extremely well priced. I dropped my Kindle for the Nook for a couple of reasons that I think make the Nook more compelling than the Kindle and wanted to share these with you all. The $199 Nook gives you both 3G and WiFi connectivity, allows you to side load EPUB books purchased from other online stores (Kobo, Fictionwise, Sony Store, etc.) via Adobe Digital Editions, allows you to check out public library books for free and load them with ADE, gives you lots of free content and special offers in physical Barnes & Noble stores, and has a better contrast eInk display for the BEST eInk reading experience.
I rarely use the 3G connectivity myself and think the WiFi Nook is the way to go for most people who want to read ebooks on a dedicated reader and Kobo may have to think about dropping the price for their device with no wireless connectivity to compete with this offering.