In what is likely a preview of what’s to come in the e-reading device marketplace, not long after Barnes & Noble introduced a wi-fi only Nook e-reader for $149 and dropped the price of the 3G Nook to $199, Amazon followed suit dropping the price of the Kindle to $189.

It appears the device price wars have started. And it’s probably no coincidence that these price changes come just as Apple is about to release iOS4, the software update to iPhone operating system that will bring the iBooks format and the iBookstore to the iPhone and iPod Touch. Indeed the popularity of the iPad seems to be driving the e-reader market these days as manufacturers scramble to find a way for single-function black &white e-ink devices to compete with Apple’s vivid backlit color screens and multi-media functionality. And price seems to be the best way for them to compete. The recent launch of e-book retailer Kobo’s $150 e-reader just adds more competition to the mix.

B&N has introduced the Nook Wi-fi for $149 that requires a wi-fi hotspot to connect online. The device has the same basic features as the Nook 3G Wi-fi, whose price was dropped from $259 to $199. In addition to lowering the price of the Kindle 2 from $259 to $189, Amazon is selling the device at all of Target’s 1740 stores around the country, the first time the device has been for sale at a retailer other than Amazon. Let the device wars begin.