Barnes & Noble drops the price of the nook to $199

CNET has reported that Barnes & Noble has dropped the price of the existing 3G-compatible nook to $199 from its previous price of $259, and has introduced a new WiFi-only model for $149. The new pricing is sure to put pressure on Amazon to drop the price of the Kindle 2 below its current $259. More importantly, it shows that Barnes & Noble recognizes that the nook and similar E-Ink-based eBook readers simply aren't competitive with the iPad.

According to the article, B&N has also made several improvements to the nook's software, and has made arrangements with AT&T to allow it to be used for free at any AT&T WiFi hotspot. This will make the absence of 3G connectivity on the $149 nook less of an issue. One could argue that the true price of the nook has been dropped not to $199 but to $149.

It'll be very interesting to see how Amazon responds, and if $149 is a low enough price to keep monochrome readers viable once Android tablets start hitting the market for $199 or less.