- Associated Press - Wednesday, September 1, 2010

SAN FRANCISCO (AP) - Lately, the electronic-reader market has been a race to the bottom, with major players such as Amazon.com Inc. and Barnes & Noble Inc. tussling over which can offer consumers the best, cheapest e-reader.

Competitor Sony Corp. is now trying a different tactic: raising prices.

Sony said Wednesday that it is adding a touch-screen to its cheapest electronic-book reader, the Reader Pocket Edition, while increasing its price by $29 in a bet that consumers will be willing to shell out more for the ability to swipe the screen to turn pages.

The new Pocket e-reader, available for purchase Wednesday, uses an infrared sensor to read finger swipes or taps from a stylus that is included, eliminating the need for a special overlay that reduces clarity. Such an overlay on the device’s screen has been in use on Sony’s existing Touch Edition and Daily Edition e-readers.

Sony is selling the new device for $179, $40 more than Amazon’s cheapest Kindle. Even with the $29 price increase, however, the Reader is still $20 cheaper than what it sold for last year.

Besides the touch capabilities, the new Pocket has a higher-contrast electronic ink display that, like the Kindle, shows 16 shades of gray, compared with eight shades before.

It is also smaller overall and has fewer buttons than the previous model, but it still has a screen that measures 5 inches diagonally. It comes with 2 gigabytes of memory for storing books, about four times the storage on the current Pocket.

Last year, when Sony introduced the Pocket and a higher-priced Touch Edition with a touch screen, the company thought consumers would gravitate toward the lower price tag. Instead, the touch screen appealed to users, who bought many more Touches than expected, said Steve Haber, the head of Sony’s Digital Reading business.

Sony is upgrading its larger-screen Reader models as well. Both the Daily Edition and the Touch Edition will now have the same touch-screen technology and e-ink screen as the new Pocket and 2 gigabytes of built-in memory.

The company said the new Touch e-reader will have longer battery life than the existing model. The new Daily will allow people to download content wirelessly through Wi-Fi connections, besides the 3G cellular access included with the older model.

The new Touch Edition began selling Wednesday for $229, a $59 price increase. The new Daily Edition will cost $299 when it is released in November, $49 more than the price of the current model. They’d both remain cheaper than the devices’ original prices last year.

Also Wednesday, Borders Group Inc. cut the prices of two e-book readers it sells by $20. The Kobo reader now costs $130 and the Aluratek Libre eBook Reader Pro costs $100.