Barnes & Noble launched the first Nook Tablet, a 16 GB version that sells for $249, in November. A new 8 GB model is only $199.
NEW YORK (CNNMoney) -- Barnes & Noble will sell a cheaper version of its Nook Tablet for $199, the same price as Amazon's Kindle Fire tablet.
The new $199 Nook Tablet comes with 8 GB of memory. Barnes & Noble unveiled the first Nook Tablet, a 16 GB version that sells for $249, in November.
Barnes & Noble also on Tuesday slashed the price of its Nook Color e-reader, a simpler device than its tablet, to $169.
The Nook Tablet is a lightweight tablet with a 7-inch screen that's optimized for media consumption: reading e-books, streaming movies and browsing the Web. Now it's priced to compete with Amazon's (AMZN, Fortune 500) Kindle Fire -- a similar 7-inch tablet-lite that also went on sale in November.
Barnes & Noble (BKS, Fortune 500) has made no secret of its attack on Amazon. At the Nook Tablet unveiling in November, Barnes & Noble CEO William Lynch said: "Kindle Fire is deficient for a media tablet. Content will render better on Nook than on Kindle Fire."
That competition has led to price wars -- which are common in the gadget world, but the e-reader battle has been particularly fierce. In June 2010, Barnes & Noble cut the price of its flagship Nook to $199 from $259. Mere hours later, Amazon slashed the Kindle price to $189.
Since then, it's been a race to the lowest possible price tag. Amazon's entry-level Kindle e-reader is now only $79 for an ad-supported version.
But the future of the Nook as a Barnes & Noble product is in doubt. Last month, the company announced that it is considering spinning off the Nook business.
In that same announcement, Barnes & Noble slashed its fiscal 2012 guidance. The company blamed its larger-than-expected losses partly on disappointing sales of the Nook Simple Touch, the company's $99 black-and-white e-reader. Sales of the Nook Tablet topped expectations, B&N said.
Barnes & Noble plans to increase its investments in its Nook line, ramping up advertising and international expansion. 
