A price war of sorts is apparently full on in the increasingly competitive e-book readers’ arena - with price reductions being announced by market leaders Amazon and Barnes and Noble (B&N), and a new cheaper B&N’s Nook version being released!

After the recent price reduction move by Amazon and B&N, for their Kindle and Nook e-readers respectively, the Kobo e-reader from Borders has been virtually knocked off the ‘cheapest e-reader’ pedestal.

To counter the price-reduction move by Amazon and B&N, Borders has begun offering a $20 gift card to the Kobo buyers – thereby bringing down Kobo’s effective cost to $129. Furthermore, Borders Rewards members will become eligible for earning double credit for the purchase; giving them sufficient points for a $10 reward certificate.

The $150-priced Kobo, which dramatically undercut the $259 price-tag of the Amazon Kindle, now face direct competition from a similar-priced Nook model which, though sand 3G, has a Wi-Fi connection – the Kobo incidentally has neither a 3G nor a Wi-Fi connection.

In addition to introducing a new Nook model, B&N has also slashed the price of the regular Nook e-reader to $199 – a move that Amazon responded to by cutting the price of its Kindle 2, the present mainstream Kindle model, to $189.

The price war between Amazon, B&N, and Borders has made the Sony e-readers slightly more expensive – while Sony’s pricey Daily Edition costs $350; its Reader Pocket Edition and Reader Touch Edition are priced at $170 and $200 respectively.