Borders Battles On Kobo E-Reader Price CutsBorders Battles On Kobo E-Reader Price Cuts

Borders has responded to electronic-reader price cuts from rivals Amazon and Barnes & Noble by bundling a $20 gift card with its Kobo e-reader.

Borders announced the offer on Tuesday, a day after Amazon and B&N said they would drop the price of their devices 27% and 23%, respectively. Besides the gift card, Borders its offering Kobo buyers double "Borders Bucks," which amounts to a $10 credit toward a future purchase from the bookseller.

While Borders's offer is less dramatic than competitors, it marks the latest volley in a price war among the three booksellers, who appear to be adopting a strategy of getting their e-readers to as many people as possible in order to see more digital books. A fourth major e-reader seller, Sony, has yet to respond to the latest price cuts.

Amazon lowered the price of its standard Kindle to $189 just hours after B&N announced that it would sell the Nook 3G for $199. Both e-readers had sold for $259. Amazon did not change the price of its larger Kindle DX, which still sells for $489.

The price cuts are not unexpected. Analysts have said for quite awhile that the growing number of e-readers in the market, and increasing competition from tablet-style computers, such as Apple's iPad, would eventually drive prices down.

Indeed, in announcing the gift card, Borders said research has identified the "consumer sweet spot" for e-readers between $100 and $150. Borders sells the Kobo for $150, but does not offer a Wi-Fi or 3G wireless connection for buying and downloading e-books. Instead, books must be purchased through a PC or Mac and transferred to the e-reader. The same is true for Sony's $200 Reader Touch.

Amazon's Kindle and B&N's Nook offer both wireless connections, making it much easier for customers to buy e-books from the respective bookseller.