This time last year, the new market for e-book readers was really taking off – gold rush style. Following the huge success which Amazon had achieved with its Kindle reader – first with the Kindle 2.0 in February of 2009 and then with the large display DX model in the summer of the same year – a small army of personal electronics firms seemed to be developing, releasing or updating e-book readers of their own in order to grab a share of the new and rapidly developing market.

Sony and Barnes and Noble were bursting a gut to get their new readers launched before the 2009 festive season and Samsung, Plastic Logic, Asus and a host of others were rushing to get their readers on the market as fast as they could. The Computer Electronics Show (CES), held in Las Vegas in early 2010, had a dedicated e-book reader section for the first time ever. E-book readers were a hot developing market.

Right now however, no more than a few months later, it’s an entirely different scenario. The price of e-book readers has tumbled. The new third generation Kindle now has an entry level Wi-Fi only model on offer for just $ 139, less than half of the $ 359 price at which the Kindle 2.0 launched. Barnes and Noble have also dropped the price of the Nook reader to S 149 – and this will probably be cut again before the festive season.

Several new e-book readers which were going through the development process – including Plastic Logic’s Que – have been cancelled. The market appears to be entering a new phase in its development – whether there will be a place for pure electronic manufacturers in future or not is somewhat debatable. The Amazon business model lends itself very well to selling lower priced readers and making a profit on the follow up sales of Kindle books. A similar strategy would be available to Barnes and Noble of course, but it’s debatable as to whether or not they can benefit from the same types of economies of scale as Amazon.

Clearly it would be somewhat naive to ignore, or even play down, the impact of Apple’s iPad in this. There’s little doubt that e-book reader prices would have come down anyway – but the iPad has certainly hastened things along quite a bit. However, bearing in mind the fact that the new third generation Kindles sold out shortly after they were released, the iPad doesn’t look like the Kindle Killer that it was expected to be.

Even putting the debate about e-ink displays being easier to read on than backlit screens to one side, there is – at this time – enough of a gap between the price of the Kindle and the price of the entry level iPad to ensure that the Kindle will continue to be the more attractive option for anyone who just wants to read books. The monthly connection fees for the iPad will also not be to everyone’s taste.

It does look as if there is sufficient room in the market for both the Amazon Kindle and the iPad to co-exist – for the foreseeable future at any rate. Other manufacturers, including major players like Sony and Barnes and Noble, will probably struggle badly if e-book reader prices keep falling.