UPDATE 2-Staples to sell Kindle, Borders cuts reader prices

Tue Aug 31, 2010 2:52pm EDT

* Staples to sell three models of the Kindle

* Borders lowers price on e-readers

* Borders, Staples, Amazon shares down (Adds Borders e-reader price cuts, share activity)

By Phil Wahba

NEW YORK, Aug 31 (Reuters) - The battle for the digital books market intensified on Tuesday, as office supplies retailer Staples Inc (SPLS.O) said it would start selling Amazon.com Inc's (AMZN.O) Kindle, and bookseller Borders Group Inc BGP.N said it was cutting its prices on some e-readers.

Amazon.com's deal with Staples comes at a time that the online retailer is trying to fend off Barnes & Noble Inc's (BKS.N) Nook e-reader and Apple Inc's (AAPL.O) iPad tablet for a slice of the growing digital books market by making its Kindle available in more stores.

Staples will start selling the Kindle at its more than 1,500 U.S. stores starting in the autumn, the company said. It plans to sell the $139 version of the Kindle, the 3G model and the more expensive Kindle DX.

In April, Target Corp (TGT.N) reached a deal to start selling the Kindle in its stores, while electronics retailer Best Buy Co Inc (BBY.N) said it would sell the Nook at its 1,070 stores.

Forrester Research estimates that Amazon has sold about 5 million Kindles since the product's launch in 2007, and that Barnes & Noble has sold 1 million Nooks since their introduction last year.

Borders, the second-largest U.S. bookstore chain after Barnes & Noble by sales, opted not to develop its own e-reader. Borders was a latecomer to the e-books market, launching its own e-bookstore only last month.

NEXT CHAPTER IN PRICE WAR

Barnes & Noble, Amazon and Sony Corp (6758.T) found themselves in a price war in July, cutting prices on their respective devices. Amazon then introduced a wireless-only Kindle for $139 in late July.

Borders said on Tuesday it was lowering the price of two e-readers it sells.

A Borders-branded e-reader by Kobo Inc, a spin-off of Canadian bookseller Indigo Books & Music Inc (IDG.TO), will sell for $129.99, while Aluratek's "Libre" eBook Pro will go for $99.99 starting on Wednesday. Staples also sells the Libre, priced currently at $124.99 on its web site.

In May, Borders Chief Executive Mike Edwards predicted prices for e-readers would keep falling, telling analysts on a call: "The lion's share of the e-reader business will be under the $200 price point going into the fourth quarter."

Despite the shrinking margins on e-readers as prices fall, the devices are crucial to spurring e-book sales, a rare source of growth in the publishing industry.

A Goldman Sachs report in April predicted e-books sales would rise to about 15 percent of total book sales by 2015 from 3 percent this year.

Staples shares were off 0.3 percent, while Amazon shares were off 0.1 percent. Borders shares were down 4.5 percent. (Reporting by Phil Wahba; editing by John Wallace and Gerald E. McCormick)

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