This time last year, the e-book reader market was like the Wild West – or maybe the gold rush would be a more appropriate metaphor. Following the huge success which Amazon had achieved with its Kindle reader – firstly with the Kindle 2.0 in February of 2009 and then with the large display DX model in the summer of the same year – a small army of personal electronics firms seemed to be developing, releasing or updating e-book readers of their own in order to grab a share of the new and rapidly developing market.

Sony and Barnes and Noble were bursting a gut to get their new readers launched before the 2009 festive season and Samsung, Plastic Logic, Asus and a host of others were rushing to get their readers on the market as fast as they could. The Computer Electronics Show (CES), which took place in Las Vegas in early 2010, had a special zone dedicated to e-book readers for the first time ever. E-book readers were a hot new emerging market.

Today, just a few short months later, the scene is somewhat different. The price of e-book reader hardware has plunged. The latest third generation Kindle now has a Wi-Fi only entry level model available for only $ 139 – less than 40% of the $ 359 price which the Kindle 2.0 launched. The price of the Nook reader from Barnes and Noble has also been slashed to just $ 149 – and a further cut before the festive season arrives seems highly likely.

A number of e-book readers which were in development – including the Que from Plastic Logic – have been abandoned. The market appears to be entering a new phase in its development – whether there will be a place for pure electronic manufacturers in future or not is somewhat debatable. Amazon’s business model is very well suited to selling lower priced readers and making a profit on the ongoing sales of Kindle books. Barnes and Noble could benefit from a similar business model of course, but it’s doubtful if they would be able to take advantage of the same economies of scale as Amazon.

Of course, it would be hopelessly naive to ignore the impact of the Apple iPad in all of this. There’s no doubt that the price of e-book reader hardware was going to fall anyway – but the arrival of the iPad on the scene has certainly hurried things along. However, based on the fact that the third generation Kindles sold out shortly after launch – even today customers are facing a three to four week wait before their Kindles will ship – it doesn’t look as if the iPad is the long awaited Kindle Killer that it was widely predicted to be.

Apart from the debate about e-ink displays being easier to read on than backlit screens, there is – for the moment at least – enough daylight between the price of the Kindle and the price of even the entry level iPad to make the Kindle the more attractive option for anyone whose primary interest is reading books. The monthly connection fees for the iPad will also not be to everyone’s taste.

It does start to look like there is enough room in the market for both the Amazon Kindle and the iPad to co-exist – for the short term future at least. Other e-book reader manufacturers, including Sony and Barnes and Noble, seem destined to struggle as hardware prices will continue to fall.