The latest race in the techno-world is sure to make bookworms happy. Prime rivals in the electronic reader market, Barnes & Noble and Amazon have embarked on a new objective- to beat the other’s price.

On Monday, Barnes & Nobles announced their new Wi-Fi only version of its Nook electronic book reader, at the rock-bottom price of $149. As if that was not enough, it also slashed the price of the 3G Nook model from $259 to $199. Much to the glee of users and as Amazon gasped in horror, B&N became the first to provide an e-reader for a price below $200. B&N even went a step further and offered free access to AT&T’s nationwide Wi-Fi network, in addition to the in-store Wi-Fi previously available. The latest Nook software update, version 1.4, has been made available to offer faster access to content.

Tony Astarita, vice president for digital products at B&N, the new model was built in response to market research and customer feedback. “It’s targeted at someone who’s a solid reader but someone with Wi-Fi availability at home or outside the home and is not as mobile a traveler or reader as a 3G person,” he told PCWorld.

As Nook got poised to take on the new Kobo e-reader priced at $149, Amazon joined in a bit late in the bedlam and reduced the cost of the Kindle to $189. Analysts view this sudden price competition as a response to the popularity of color-display tablets like iPads, which can also be used as e-book readers, but provide a host of other functions. Informa Telecoms & Media recently estimated that sales growth for broadband wireless e-readers such as the Nook with Wi-Fi and 3G will be limited by 2014.

Michael Norris, a senior trade analyst at Simba Information, said the Nook’s price cut indicates New York-based Barnes & Noble “is admitting that when they’re up against a $500 digital photo frame on acid that does everything, they can no longer keep a straight face when selling something for $259 that only does books.”

Barnes & Nobles shares fell 55 cents, or 3.2 percent, to finish trading at $16.52. Amazon shares declined $3.28, or 2.6 percent, to $122.55.