Amazon may be riding high in the eReader rodeo these days with the release of the new Kindle, but it doesn’t own the market – and it’s feeling pressure from the competition once again.  

Effective Wednesday, Borders will lower the price of its two eReaders, the Kobo and the Aluratek. The Kobo is falling from $149 to $129. The Aluratek will drop from $129 to $100, putting it in the sweet spot for consumers.

Borders is leading the price war because its readers fall short on some major features – specifically, they lack both WiFi and 3G and need to be docked to a PC to download books. But in the current economy, price alone could turn some consumer’s heads.

Barnes & Noble’s nook device kicked off the price wars, when the bookseller unveiled a wifi only version in June that prompted Amazon to slash prices on the Kindle. Amazon upped the stakes last month with the new version of its device, which sells for $139 and is presently back-ordered through mid-September.

So far, neither Barnes & Noble nor Amazon has reacted to the price cuts.

Overshadowing all of these, of course, is the iPad, which continues to be a retail darling and whose iBooks offering is spreading fast to other Apple devices, including the iPhone and iPod Touch. While Amazon, Barnes & Noble and Borders all have apps for the iDevices, letting them make money on book sales, each is still betting significantly on their own device. 

Despite my less than glowing review of the DX, I want to state up front that I really am a fan of Amazon’s e-book reader. The idea is great and the execution is generally pretty good, even if the price is still entirely too high.

But lately when it comes to Kindle service, the e-tailer has seemed like the gang that couldn’t shoot straight. Customers who had the Kindle 2 found that the case they paid an extra $30 for was cracking their device – and Amazon was charging $200 to repair them. (It has since dropped that policy.)

Now, the company has remotely deleted every legitimately purchased copy of “1984” and “Animal Farm”. The New York Times reports the publisher of those books changed its mind about offering an electronic edition of the classics and Amazon capitulated to those whims.

It’s akin to a Waldenbooks store manager breaking into your house and taking back the copy of the last “Harry Potter” book because a publisher said so. Never mind that the e-books were paid for.

David Pogue rightly points out that Kindle sales are apparently not final, which gives fence sitters yet another reason to stick with the bound products.

Sure Amazon may reverse itself in a few days and return the books to owners or offer some sort of additional compensation beyond the refund it supplied people who bought the book (though there’s no guarantee it will do either).

The message, though, is clear: You, as the customer, are secondary to its partners. Thanks, Amazon. Thanks a lot. 

UPDATE: Word is trickling down that Amazon made the move because the publisher that uploaded the books using a self-service platform did not have the publishing rights to them. That said, it vowed it would not repeat this should the situation present itself in the future. So the reason behind the action makes a bit more sense now -- but the action itself is no more correct than it was before the explanation. 

At first blush, it may be hard to understand why Amazon is releasing a Kindle app for the iPhone. Might that not cut sales of the Kindle? If you already own an iPhone, but have balked at spending $350 for Amazon's eBook reader, suddenly you have a solution.

And as the Wall Street Journal's esteemed Walt Mossberg has stated, it's a pretty good one. "The new Kindle app isn’t as full-featured as some other e-reader apps for the iPhone, which do allow annotation, searching, and so forth," he wrote last night. "But it gets the job done and it gives you access to Amazon’s large catalog, which contains more popular and current commercial titles than other e-book sellers offer."

Turns out that's a great thing for Amazon, though. Peter Kafka at AllThingsD explained why very succinctly:

That's why Apple has always made it difficult to move iTunes content to devices other than iPods (though it's a bit easier now that the music library is DRM-free): The margins it makes on music downloads is minimal. The sames goes for TV shows. The margins on some movie downloads are in fact non-existent, if not negative. Apple just wants you to buy its hardware, for which the margins are huge.

But eBooks aren't as bad a business for retailers as digital music and video. Amazon makes a healthy profit on each sale. And it's not really a hardware company. The Kindle is its way to stay relevant as the book market goes digital. The Kindle store is really where the action is at.

So if iPhone users have a way to access the Kindle store, Amazon is happy. And if some of them become convinced to buy the actual Kindle device for a much better reading experience, all the better.