Sony's heating up the ebook reader market by releasing a $199 pocket-sized device, the Reader Pocket Edition. This is $70 cheaper than Sony's previous lower-end reader, and $100 less than Amazon's Kindle 2.

Later this month, Sony will release the pocket one and a touchscreen version for $299.

The NYT has the details.

Sony also dropped the price of bestselling books to $9.99 in its ebook library to match Amazon's price for Kindle titles. Publishers still charge Sony and Amazon about half the hardcover price for new books (which are typically $25 to $30), meaning the companies eat $2.50 to $5.00 per title for this category.

But this is all about jumpstarting the market. Getting more books available for sale, selling more readers, and selling more books.