WASHINGTON (MarketWatch) -- Amazon.com Inc. on Monday slashed the price of its Kindle to $189 from $259, just hours after Barnes & Noble Inc. cut the cost of its competing e-book reader.

The latest round of price cuts reflects growing competition in the e-reader category, a trend that's putting more pressure on market leader Amazon. The introduction Apple Inc.'s AAPL, +1.50% iPad tablet computer also has given consumers another option.

Earlier Monday, Barnes & Noble BKS, +0.16% reduced the price of its e-reader, the Nook, by 23%. The new price is $199, down from $259. B&N also introduced a new WiFi-only version for $149.

Hours later, Amazon AMZN, +0.12% responded with an even deeper price cut of 27%.

Although Amazon is the leading seller of e-book readers, a handful of companies including B&N and Sony Corp. SNE, -0.94% now offer similar devices. The resulting competition has spurred Amazon to cut prices several times since the original Kindle first went on sale in late 2007, at $399.

Despite falling e-reader prices, the cost of electronic books has remained flat or actually risen slightly as publishers seek a bigger piece of the pie. Amazon has said its main focus is on selling e-books. The company even gives away software that allows customers to read e-books on personal computers, iPhones and BlackBerrys.

As prices of e-readers fall, sales of both the devices themselves as well as e-books are sure to accelerate. The research firm Yankee Group estimates more than 6 million e-readers will be sold in 2010, with consumers becoming more interested as prices fall below $150.

Later this year, Amazon reportedly will issue the next major update to the Kindle. The third version of the device is expected to be lighter than the current 10.2-ounce model and feature faster page turning, among other improvements.