updated 5/24/2011 8:23:24 PM ET 2011-05-25T00:23:24

Online retailer Amazon.com Inc. is selling an ad-laden version of its Kindle 3G e-reader, which has wireless service for downloading books.

Amazon said late Tuesday that the new Kindle 3G with Special Offers costs $164. It includes on-screen ads and is $25 cheaper than the standard Kindle 3G.

Last month, Amazon started selling a Wi-Fi-equipped Kindle with ads for $114 — $25 less than the standard Kindle with Wi-Fi.

The announcement came the same day that Barnes & Noble Inc. introduced a cheaper version of its Nook e-reader with a black-and-white touch screen. At $139, the new Nook shows the book seller is trying to compete with Amazon and Borders Group Inc. on e-reader prices.

Amazon has consistently lowered the Kindle's price since first releasing it at $399 in 2007.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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