During the final quarter of 2011, Amazon’s newly released 7-inch Kindle Fire tablet managed to be No. 2 in tablet sales, just behind Apple’s juggernaut iPad. That hasn’t gone unnoticed in the Android tablet world, with Amazon competitor Barnes & Noble announcing today a comparable Nook Tablet to take on Amazon’s new champ.

The story comes from GigaOM, which reports that Barnes & Noble’s new Nook Tablet is pretty much identical to its old one, except for the price tag. The ammunition that Amazon’s tab has is its highly affordable price tag at just $199. So the new Nook Tablet will also come in at $199, down from $249. Barnes & Noble has also dropped the price of its Nook Color e-reader, from $199 to $169.

The big difference between the new Nook and the old one is its memory/storage capacity. the $199 Nook will include 8GB of hard drive space and 512MB of RAM, whereas the $249 model carries a 16GB hard drive and just over a gigabyte in RAM.

Grabbing an early lead

It makes sense that Barnes & Noble sees the Kindle Fire as a legitimate threat. During the holiday season in 2011, Amazon’s new tab and the Nook Tablet taken together accounted for some 21 percent of the tablets sold for the quarter, GigaOM reports. But the Kindle Fire made up more than two-thirds of that chunk of the market – a pretty clear shot across the bow from Amazon, and a pretty good reason for Barnes & Noble to make a play to combat the Fire’s early supremacy.

But Barnes & Noble isn’t the only one potentially making moves in this particular segment of the Android tab market. Rumor has it, Amazon is planning to release another version of the Kindle Fire, this one more in line to take on the likes of the iPad and Samsung’s Galaxy Tab 10.1. According to a story reported by Digital Trends, Amazon has placed an order with Taiwanese component manufacturer Foxconn to build a 10-inch version of the Fire that will be available this summer.

That rumor comes from Asian tech website DigiTimes, which is often at the center of such rumors but which is right about as often as it’s wrong. Still, should this rumor prove to be true, it would be a sign that Amazon is intending to try to make the success of the Kindle Fire work in another segment of the tablet market, making it more of a competitor to other Android tab makers such as Motorola and HTC.

Content is key

The Kindle Fire’s success has a lot to do with its price tag, surely, but Amazon’s strength comes from the big ecosystem of content it can lend to its tablet. It’s filled with quick, easy to download apps, e-books, videos and music. That’s part of what makes it so dangerous against Barnes & Noble and the Nook Tablet; if Amazon can lean on the strength of the content empire it has already built, presumably its tablet could be a contender at a larger size (and presumably higher price tag).

Meanwhile, even in the short time the Kindle Fire has been around, Amazon is establishing itself as a force in the Android tab market, and its competitors are taking notice. Even with its price drop, though, Barnes & Noble needs to be thinking about ways to fight back, because Amazon has quite a lot of ammunition in its online empire.