Race Heats: Amazon Launches $199 Kindle Fire

Kindle-Fire

Amazon.com officially entered the tablet race Wednesday with the long-awaited launch of its answer to Apple's dominant iPad -- the Kindle Fire. The device will retail for $199.

At a packed press event in New York, Amazon unveiled an Android-powered tablet with expected features, including a 7-inch touchscreen that runs a customized version of Google's Android operating system with access to the retail giant's app store, streaming media, books and other content.

But the Fire also boasts a new mobile browser optimized for the device called Amazon Silk. It's designed to speed up page-loading by splitting computing tasks between the cloud and the tablet.

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Separately, Amazon rolled out a new color touchscreen version of its popular e-reader dubbed the Kindle Touch. The Wi-Fi-only version will sell for $99, while the 3G model will cost $149. Both feature Amazon's EasyReach technology for turning pages by tapping the screen in specific areas. In addition, the company introduced a new non-touchscreen Kindle model that will retail for $79.

Previously, the lowest-priced Kindle, featuring ads, was $114. The Kindle Fire will ship Nov. 15 and the Touch models on Nov. 21, in time for the crucial holiday-shopping season. The new basic Kindle is available now.

Amazon's aggressive pricing will present a challenge both to the iPad and Barnes & Noble's Nook e-reader. The Wi-Fi-only Fire, priced at $199, is $300 less than the 10-inch Apple tablet and $50 less than the 7-inch Nook Color.

"We're selling premium products at premium prices," Amazon CEO Jeff Bezos repeated as a mantra during his presentation today, clearly aiming to undercut its chief competitors at the register.

Despite its smaller size, Amazon's existing customer base, pricing and online marketing muscle could make the Fire the most formidable challenger to the iPad so far. It also has the track record of developing the world's best-selling e-reader in the original Kindle.

If the Amazon tablet catches on with consumers, it will succeed where many other would-be iPad rivals have failed. Among the most high-profile tablets to fall short of expectations has been Research in Motion's PlayBook, the Motorola Xoom and HP's TouchPad, which the company is discontinuing at the end of October.

The Samsung Galaxy Tab -- the iPad's nearest competitor to date -- has captured only a fraction of the market. (Samsung announced Tuesday the latest version of the Galaxy Tab, starting at $469, will be available in the U.S. Oct 2.)

Research firm Gartner estimates Apple, which has sold about 29 million iPads to date, will account for 73.4% of media tablet sales worldwide in 2011. It also projects Apple will command more than half the tablet market through 2014.

Bezos emphasized that the Kindle Fire will draw on the company's expanding array of digital content services. That includes access to 17 million MP3 songs, 100,000 movies and TV shows, a million Kindle books and hundreds of top magazines and newspapers from publishers.

Earlier this week, Amazon announced a partnership with News Corp.'s Fox, with brings TV shows such as "24" and "Ally McBeal" and movie classics like "Butch Cassidy and the Sundance Kid" to its Prime streaming service. Amazon has already struck deals with Sony, CBS and NBCUniversal for video content.

The Fire also comes with a 30-day free subscription to Amazon Prime --the company's two-day shipping service -- and a pre-installed Amazon shopping app. On top of that, the new custom-built browser, Amazon Silk, which interfaces with EC2, Amazon's cloud server, promises to improve mobile Web performance.

Another new wrinkle the Fire brings is extending Whispersync -- the feature that allows a Kindle user to continue reading from one device to another -- from books to video. So someone watching a TV show or movie on the Fire can pick up where they left off on their living room TV when they get home. Amazon is also offering free storage for all digital media via its cloud service.

Amazon has declined to comment on rumors it also plans to introduce a 10-inch version of its new tablet to go head-to-head with the iPad. Even so, it should take some share from the Apple tablet, as well as eat into sales of other manufacturers' tablets.

Forrester analyst Sarah Rottman Epps predicts the Fire could sell at least 3 million units in the fourth quarter alone. In a blog post today, she said the Amazon tablet will be a strong No. 2 to the iPad and doesn't expect any other serious competitors to emerge until the rollout of the Windows 8 tablet next year.

She added that the device should also boost creation of Android tablet apps, which lag far behind the more than 100,000 for the iPad. "The rapid-fire adoption of the Kindle Fire will give app developers a reason -- finally -- to develop Android tablet apps," she wrote.

The Kindle Fire may pose a more immediate threat to Barnes & Noble's Color Nook, which offers Web surfing and applications and sells for $249. The breadth of content and services Amazon is delivering through its tablet, at a lower price, will put the book chain under pressure, after getting briefly ahead with a color e-reader.

TechCrunch reported Tuesday that Barnes & Noble is preparing to launch the Nook Color 2 next month, with Gingerbread, a more advanced version of Android than that which the Kindle Fire is equipped with (Android 2.1). The other new, lower-priced Kindle devices will also challenge Barnes & Noble's the Nook Simple Touch Reader, priced at $139.

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