• by Mark Walsh  @markfwal, September 6, 2012

Amazon on Thursday announced new versions of its Kindle Fire tablet including a larger model designed to better compete with Apple's dominant iPad. The company also debuted an upgrade to the original Kindle Fire and new illuminated e-reader to counter Barnes & Noble's glow-in-the dark Nook model.

At a press event, Amazon CEO Jeff Bezos unveiled the new Kindle Fire HD, featuring an 8.9-inch display, bigger than the current 7-inch screen and closer in size to the 10-inch iPad. The device also includes up to 32 GB of memory, a sharper screen, and stereo sound with Dolby Digital Plus.

The HD model also comes in a 7-inch size, which will sell for $199 (16 GB) and ships Sept. 14. The 8.9-inch device will sell for $299 (16 GB) and ships Nov. 20, just in time for the peak holiday shopping season.

The upgrades to the original Kindle Fire include a faster processor, twice the RAM, 40% faster and longer battery life. The price has also been reduced to $159 and it ships Sept. 14.

Amazon is counting on the new models to rejuvenate sales of its tablet, which plummeted at the start of 2012 after a strong holiday season. Shipments of the Kindle Fire in the first quarter fell 62% to 0.8 million units from 4.8 million in the fourth quarter, according to IDC data. That dropped Amazon from a 16.8% share of the worldwide tablet market to just a 4% share, with Samsung jumping ahead to second place behind Apple.

While the Kindle Fire -- along with devices such as the Google Nexus 7 -- are among the leaders in smaller-sized tablets, the landscape could shift with Apple rumored to launch an iPad Mini in October. If competitively priced, a smaller iPad could prove a formidable rival to the Kindle Fire.

Amazon also brought out its answer to Barnes & Noble's popular Nook with Glowlight e-reader. The new Kindle “Paperwhite” features a front-lit screen and boasts extra-long battery life. The Wi-Fi model will retail for $119, while the 3G version will sell for $179). The Kindle Paperwhite will go on sale Oct. 1.

The price of the entry-level Kindle e-reader was also dropped from $79 to $69.

The success of the new or updated devices is crucial to Amazon's broder strategy of using its hardware to sell a wide range of digital goods and services. “This is an important launch for Amazon, as it continues to evolve its strategy of service syndication: pushing Kindle, Prime, Instant Video, Cloud Drive, and now its data plan to as many touchpoints as possible, making it more convenient and pleasurable for consumers to buy Amazon stuff,” wrote Forrester analyst Sarah Rotman Epps, in a blog post today.

A Forrester survey of 4,650 U.S. consumers conducted online in August showed that 31% reported they had a credit card on file with Amazon, compared with 18% that have one stored with Apple and 5% with Google. Epps said that payment connection should give the company an advantage in rolling out new subscription services like Amazon Prime, as well as new products -- including its own smartphone, which 23% said they would be interested in purchasing if available.