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Amazon is the current market share leader in e-readers with its Kindle.

A price war is erupting in e-readers with both Barnes & Noble and Amazon.com slashing the prices of their respective devices on Monday.

Barnes & Noble, the largest book retailer in the United States, kicked things off with an announcement that it was lowering the price of its Nook e-reader, which can download books on the fly through its 3G wireless connection, to $199 (U.S.) from $259. The book chain also announced it was adding a Wi-Fi-only Nook to its offerings for $149. Neither is available yet in Canada.

Hours after the announcement, Amazon.com lowered the price of its 3G-enabled Kindle — which is available in Canada — to $189 (U.S.). The Kindle DX, which has a larger screen and more storage space, remains priced at $489, however. Amazon is the leader in e-readers with an estimated market share of between 40 and 60 per cent.

Both companies are also competing with a number of other e-reader makers, including Sony and Samsung. Apple is also expected to be a major player in e-books with its hot-selling iPad, although that device is different than rivals' e-readers in that it uses a traditional LCD screen, much like a computer, rather than a special e-ink display that simulates the look of a printed page.

Most analysts expect e-reader sales to skyrocket this year, amounting to between six million and 14 million units in the United States alone. Earlier this year, the Yankee Group estimated that more than 19 million e-readers will be sold in the United States by 2013.

Toronto-based Indigo Books and Music took an aggressive early step into the e-reader price war in May when it launched its Kobo device, priced at $149 (Canadian). Kobo chief executive Michael Serbinis has said that he expects e-readers to be available for $100 or less by the end of this year.