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B&N adds $149 Wi-Fi-only Nook, cuts Nook 3G to $199

Barnes & Noble makes an aggressive move to cut into Amazon's lead in the e-book market, adding a new entry-level Nook and dropping the Nook 3G's price.

The new $149 Wi-Fi-only Nook looks virtually identical to the original Nook 3G but is half an ounce lighter and has a white instead of gray back. Barnes & Noble

We've been waiting to see which company--Amazon or Barnes & Noble--would blink first when it came to price cuts for its e-readers, and now we get the answer.

Barnes & Noble not only introduced on Monday a new Wi-Fi-only Nook for $149, but also cut the price of the original Wi-Fi and 3G-enabled Nook from $259 to $199. The new model will be available later this week and can be preordered now.

Barnes & Noble is also upgrading the software for its Nook e-readers to version 1.4 and offering "complimentary" access to all AT&T Wi-Fi hot spots around the country. But the real news here is the price cuts because the new Nook has only minor design and feature changes; it weighs in at half an ounce less than the Nook 3G and has a white instead of gray back.

When the Nook got off to a rough start with negative reviews from major publications like The New York Times, Barnes & Noble sought to snuff out a number of software bugs and add promised features, such as free in-store streaming for many e-book titles. This is the fourth software upgrade since the Android-powered device launched in November, and the company recently released a new B&N Reader iPad app that was generally well received.

The price moves obviously put pressure on Amazon to the cut the price of its $259 Kindle and possibly bring out a cheaper Wi-Fi-only model as well. Rumors have been floating around for a while that Amazon is getting set to release a new e-reader of its own that may have a touch-screen interface and offer zippier performance since current E-ink technology is inherently slow.

Barnes & Noble's ability to drop the price to $149 for its entry-level e-reader is key because at that price the Nook begins to enter the territory of the impulse purchase. Sony's Pocket Edition e-reader now can be had for around the same price, and Borders is just bringing out its Kobo e-reader for $149. But neither of those models features Wi-Fi-connectivity, and the Sony model has a smaller 5-inch E-Ink display.

Of course, someday, e-readers like the Nook and Kindle may cost close to nothing with the purchase of a subscription to an e-book club that requires you to buy a certain number of titles each month. That day is still a little ways off, but we'll see what Amazon has up its sleeve. If it doesn't respond soon, its huge market lead will erode even more quickly as big competitors like Barnes & Noble--and perhaps Apple in the future--make aggressive moves in the e-book market.

Note: Early Monday afternoon, Amazon responded to Barnes & Noble's price cut with a price trim to the Kindle, which now costs $189. Additionally, Borders announced that it will bundle a $20 gift card with its $149 Kobo e-reader.