E-book readers, start your engines. Amazon (AMZN) began taking orders Thursday for two new, cheaper versions of the Kindle e-reader.

The two devices are lighter and about 20% smaller in size than their predecessors. A new Wi-Fi-only Kindle, which will require consumers to download books over Wi-Fi networks, rather than 3G cellular networks, will sell for $139, making it one of the cheapest e-readers on the market. The standard unit, which will allow 3G and Wi-Fi downloads, will sell for $189, down from $259, the company said in June. Both Kindles will be available August 27.

Amazon says the devices represent an attempt to expand the Kindle's appeal.

What do the devices mean for Amazon shareholders? The company is stepping up its efforts to compete with other e-readers, including Apple s (AAPL) iPad, which allows users to read e-books and includes other mobile applications. Apple has sold more than three million iPads since April. The most basic unit sells for $499. Since then, Amazon s stock has dropped 14% to $117.13 at Wednesday's close. Another competitor is the Nook from Barnes & Noble (BKS). Last month, the company lowered its price from $209 to $199 and announced a Wi-Fi-only version for $149.

The Kindle's price cut is the fourth since Amazon began selling the first-generation device in November 2007 for $399. Those price reductions underscore the crowded market.

Some say the iPad isn't hurting the Kindle and that it could be helping its sales in part because both gadgets offer mostly separate features and a different e-reader experience. "The month over month and year over year acceleration in Kindle sales between April-June shows that the iPad... is complementary to the Kindle and not a replacement," Youssef Squali, an Internet software and services analyst at Jefferies, wrote in a report, adding that the expanding e-reader industry shouldn't harm the Kindle's sales.

Still, Amazon's decision to withhold official Kindle sales figures could be presuring the company's stock. (Management did not provide hard numbers but indicated strong sales growth for the device in the company's second-quarter earnings report released last week.)

As for the broader company, second-quarter earnings climbed to $0.45 a share, up from $0.32 a share in the year-ago period, but fell below the Wall Street consensus of $0.54. The letdown was caused in part by new spending to help boost sales for Kindle. That increased investment is likely to continue into the third quarter, which is reflected in Amazon s below consensus 3Q guidance, Dan Geiman, an analyst at McAdams Wright Ragen, wrote in a report.