Publish date:

E-Reader Price War: Today's Outrage

The e-reader price war -- great in the short-term for consumers -- could be terrible, in the long-tern, for tech-stock investors.



) -- From a consumers' point of view, the

e-reader price war

raises some questions -- questions that tech companies, and their investors, might not want raised.



(AMZN) - Get Report

quick-fire decision on Monday to slash its price on the Kindle by $70 -- after

Barnes & Noble

(BKS) - Get Report

made a similar price reduction for its Nook -- begs one especially troublesome question: How legit are retailers' pricing strategies?

The Kindle originally debuted at $299 before being cut to $259 last October. Now shoppers can snag the device for just $189. How can consumers, in turn, not ask themselves, "If Amazon can reduce the price tag so significantly, why did I purchase it at full price?"

The tech sector has, thus far, remained relatively immune from price-sensitive shoppers. Even amid the recession,


TheStreet Recommends

(AAPL) - Get Report

posted record sales of its iPhone and iPod devices; and the launch of its iPad back in April was a massive success even as shoppers continued to worry about the job market.

But an e-reader price war might cause consumers to wise up ... and threaten the marketing of future tech launches.

When, indeed, was the last time you saw shoppers lining up around the block for a new pair of


(GPS) - Get Report

jeans? Just one look at the apparel sector, and one can see firsthand what the aftermath of price reductions looks like.

There are only a handful of apparel retailers, like

Urban Outfitters

(URBN) - Get Report

, that have been able to train shoppers to purchase merchandise at full price or risk not being able to find the item when they return to the store. By comparison, one would be hard-pressed to find many shoppers who will walk into Gap and buy something before it goes on sale.

Half the lure of new gadgets is their perceived status. A price war threatens the future success of these devices, by turning them into a commodity, not a luxury.

-- Reported by Jeanine Poggi in New York.

Follow Jeanine Poggi on


and get more stock ideas and investing advice on our sister site,