The cost of Amazon.com's Kindle electronic-book reader has plummeted following a price war with Barnes & Noble's Nook.

Both outfits had been charging $259 and then Barnes & Noble slashed its price by $60. Kindle responded with a $70 cut.

It is not clear if Barnes & Noble is ready to fold yet. The price cuts seem to indicate that Amazon wants to maintain its dominance in the market at all costs.

Already it has to ward off competition from Apple's iPad tablet, which can be used to read books in addition to browse the Internet, and play videos and games. It's only advantage in that competition is the fact that it is now a lot cheaper and can be read in direct sunlight, which turns the Apple screen to dust.

Americans are expected to buy 5 million e-readers this year and the falling prices of readers can only help the market.