NEW YORK CITY--Amazon (NASDAQ:AMZN) introduced its Kindle Fire tablet computer, a WiFi-only, 7-inch slate priced at $199 to drastically undercut the $499 base price of Apple's (NASDAQ:AAPL) iPad.
The Kindle Fire, which is based on Google's (NASDAQ:GOG) Android operating system, will go on sale Nov. 15.
The device is equipped with an IPS, Gorilla Glass-based touch screen, is powered by a 1GHz, dual-core processor and weighs only 14.6 ounces. The tablet has 8GB internal storage and roughly 8 hours battery life.
The Kindle Fire will be the main vehicle with which Amazon drives users to its 18 million books, magazine, movies, TV shows, songs, and applications.
During a demonstration of the Kindle Fire here, Amazon CEO Jeff Bezos showed how a user interface built atop Android provides consumers easy access to the company's content. There is even multitasking; users may read books while playing their music in the background.
Amazon's patented Whispersync content synchronization technology now works with Amazon Instant Video. This will allow consumers to watch movies and TV shows on the Kindle Fire, stop watching them and pick up where the movie left off on their home television or PC.
The Kindle Fire provides access to the Web via Amazon Silk, a mobile Web browser created by Amazon that leverages Amazon's EC2 Web services cloud to boost Web page rendering on the hardware. Bezos called this software a "cloud-accelerated mobile browser."
While Amazon may take a hit on selling the Kindle Fire hardware at $199 a pop, the company expects to make up the costs by selling consumers movie and TV show rentals, titles from its Kindle bookstore, as well as streaming music from the Amazon Cloud Player for music, and applications from Amazon's Appstore of Android programs.
The slate will come with a free, 30-day trial of Amazon Prime, the $79 a year membership service that afford consumers free, two-day shipping and access to Amazon's Prime streaming movie service. Amazon is also providing free Cloud storage for every Kindle Fire.
"We're building premium products at non-premium prices," Bezos said.
The Kindle Fire may not be an iPad replacement for everyone. Like the original iPad, the Fire lacks a camera to enable users to shoot pictures or video. The Fire also lacks a microphone and mobile broadband capabilities for access on 3G and 4G LTE networks.
Still, the price point alone will win over cost-conscious consumers at time when Apple has set the tone for the market in selling more than 30 million iPads.
Piper Jaffray analyst Gene Munster polled 410 consumers last week and found that 62 percent of those consumers said they would purchase a $249 tablet over the average, $599 iPad sold. He expects the e-commerce giant will sell 2.5 million Kindle Fires for the holiday season.
At the least, the Kindle Fire will instantly threaten existing Android "Honeycomb" tablets, which have cost between $400 and $800 and haven't sold as well as Google or the OEMs making them, such as Motorola Mobility and Samsung, have liked.
Noting that he considers Kindle an end-to-end service for consumers, Bezos also showed off three new Kindle models: the Kindle touch, Kindle 3G and a $79 Kindle e-reader. Available now, the $79 Kindle has built-in WiFi, an advanced e-ink display, weighs less than 6 ounces and stores more than 1,400 books.
For $99, the Kindle touch most closely approximates a digital book. It is a black-and-white device that leverages Amazon's new EasyReach menu system.
The Kindle 3G costs $149 and, most importantly, offers consumers free 3G access to go with the e-ink display, EasyReach on the touch interface, and the ability to house thousands of books. Both the touch and 3G will ship Nov. 21.
"We're going to sell many millions of these," Bezos said, about the company's new Kindle gadgets.