Barnes & Noble, which has said the Nook has allowed it to win 27 percent of the U.S. e-books market, said it had slashed the retail price of its Nook tablet with 16 GB of memory to $199 from $249. Amazon is the market leader with about 60 percent of e-book and e-reader sales.

The largest U.S. bookstore chain also shaved $20 off its 8 GB version of the tablet to $179. Barnes & Noble lowered the price of its Nook Color by $20, bringing it to $149, the latest reduction for that model.

The new prices went into effect on Sunday.

Despite the popularity of the Nook devices, Barnes & Noble has had to reduce the price of various versions on a number of occasions to compete with Amazon, which is believed to be preparing to launch a new version of its Kindle Fire tablet. The earlier price reductions cut into Barnes & Noble's earnings.

The company, which has bet its future on staking a claim in the e-books industry, reported lower-than-expected revenue in the fourth quarter and said Nook revenue fell 10.5 percent.

Signs at one Manhattan Barnes and Noble store already reflected the new prices on Sunday.

(Editing by Richard Chang)

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