Amazon has lowered the price on its Kindle 2 e-book reader, just five months after it came on the market.

Amazon trimmed $60 off the top price of its second-generation e-book reader, so it now carries a more reasonable price tag of $299. The cut is being seen as a crossroads for the e-book reader market. Amazon says that the price drop reflects an increase in manufacturing volume and a decrease in production costs. However it seems that the outfit may have woken up to the fact that it needs to drop the price to establish itself as a leader in the category going forward and to remain competitive.

Competition is certain and Amazon needs to elbow its way in as a Microsoft of the ebook world if it is going to survive. To do that it needs as many of the gismos out there as possible. So far there is the Sony Digital Reader PRS-700 ($350) and the Sony Digital Reader PRS-505 ($280), as well as lesser-known alternatives like the Interead Cool-er Books ($249) and the Astak EZ Reader ($270). Kindle has the disadvantage that it uses a proprietary format while the others are happy sharing PDB- and ePub-based books.

Amazon does have one advantage in that it has a good inventory for books. However its downside is that it is an American operation which cannot seem to get its gizmo working in Europe.