Amazon unwraps larger Kindle Fire, takes on Apple

SANTA MONICA, California Fri Sep 7, 2012 3:52am IST

1 of 3. An employee demonstrates the new Kindle Fire HD 8.9' at Amazon's Kindle Fire event in Santa Monica, California September 6, 2012.

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SANTA MONICA, California (Reuters) - Amazon.com Inc (AMZN.O) unveiled larger, faster, aggressively-priced Kindle Fire tablets on Thursday, challenging Apple Inc's (AAPL.O) dominant iPad and intensifying a battle with Google Inc (GOOG.O) and Microsoft Corp (MSFT.O) in the booming tablet arena.

The world's largest Internet retailer, which got into the market last year with a 7-inch tablet roughly half the price of the iPad, will begin selling on Nov 20 an 8.9-inch version with a high-definition screen, that works off either WiFi or fourth-generation wireless broadband, known as 4G.

Called the Kindle Fire HD, the 8.9-inch device starts at $299 for WiFi and 16GB of storage. Apple's WiFi iPad 2 with 16GB of storage costs $399.

The 4G Fire HD model, with 32GB, costs $499, while the 4G device with 64GB has a $599 price tag. The latest WiFi-only, 32GB iPad costs $599 and the top-end iPad with 3G and 64GB of storage costs $829.

Amazon's two 7-inch tablets will cost less. The updated Kindle Fire will be $159 and a Kindle Fire HD version is $199.

The Kindle Fire HD has a 1920 by 1200 resolution screen, lagging Apple's so-called "retina" display. At 8.9 inches, it is also smaller than the iPad's screen.

"Their first Kindle Fire tablet was a device that said 'See, we can tie all this together," but it wasn't a strong enough device," said Forrester Research analyst James McQuivey.

"Now they've really come ready to show that their device line-up is going to be as good as their service line-up. They're tying those two things together, and at a price that is very very hard to compete with. It's going to push everybody's else's price buttons -- including Apple's."

Apple is expected to unveil the iPhone 5 next week, and Microsoft and Nokia launched their powerful Windows phone on Wednesday.

Amazon Chief Executive Jeff Bezos took the stage to unveil two 8.9-inch versions of the Kindle Fire HD. He said Amazon saw the Kindle family of e-readers and tablets as a service, with hardware critical to its digital content business.

Amazon is competing with Apple, Google Inc (GOOG.O) and other technology companies in the booming market for mobile devices, which are becoming the preferred tools for consumers to access media over the Internet.

As the world's largest Internet retailer, Amazon must have a major presence in this sector. It is willing to make little or no money selling cheap tablets and e-readers to get the devices into as many hands as possible. Then, it can sell higher-margin digital content, such as e-books, video, games, apps and music, to a more connected and engaged customer base.

Amazon also showed off a "paperwhite" e-reader with a much sharper screen and longer battery life.

The 3G wireless version that made digital readers mainstream will sell for $179 starting in October, in time for the crucial holiday season. A Wi-Fi-only version will go for $119, and the cheapest will carry a $69 price tag -- undercutting the cheapest Barnes and Noble (BKS.N) Nook.

Shares in Amazon closed on Nasdaq up 2.1 percent at $251.38, after hitting an all-time high of $252.70 during the session.

(Reporting By Lisa Richwine and Ron Grover in Santa Monica and Alistair Barr in San Francisco; Editing by Gerald E. McCormick, M.D. Golan and David Gregorio)

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