Amazon takes on Apple iPad with larger Kindle Fire

Amazon unveiled four new Kindle Fire tablet computers on Thursday, including ones with larger color screens, as the online retailer steps up competition with Apple ahead of the holiday shopping season.

Amazon has been selling lower-priced tablets at thin, if any, profit margins to boost sales of digital items from its online store. As a result, it has been able to compete with the iPad on price.

Amazon.com showed off the larger Kindle Fire with a high-definition display amid expectations that Apple Inc will introduce a smaller iPad as early as next week.

The larger Fires will have screens that measure 8.9 inches diagonally, compared with 9.7 inches for the iPad. The original Fire had 7-inch screens. The basic version of the larger Fire will sell for $299, or $100 less than the cheapest iPad.

"It's very clear today that there are two names in the market for tablets. One is Amazon and one is Apple," said Carolina Milanesi, research vice president at Gartner.

Seven out of every 10 tablets sold in the second quarter were iPads, according to IHS iSuppli. Tablets using Google's Android operating system have not been able to carve out a significant stake. Amazon is trying to change that with the new Fires, which run a modified version of Android.

CEO Jeff Bezos said in an interview backstage that Amazon won't lose money on the devices even if customers don't use them to buy digital content from its online store.

"We want people to buy content from the device, sure," he said. "We're fine if they don't."

The basic, 7-inch Fire model will cost $159, down from $199 for the original model, which sold out last month. Amazon says it is 40 per cent faster, comes with twice the memory and has a longer battery life than the old version. It will start shipping next Friday.

Amazon's bread-and-butter is not its Kindle gadgets but the movies, books and music that people consume through them.

But Amazon signaled on Thursday that it is going head-to-head with Apple when it unveiled its high-end Kindle Fire HD. It will have two Wi-Fi channels and two internal antennas for faster, smoother transfers. That will be crucial for high-definition movies and other large files, Bezos told reporters.

The HD model will also have more storage, starting at 16 gigabytes (the same as the iPad), compared with 8 GB for the old Fire. About 2 GB is taken by the Fire's operating system.

An 8.9-inch model will go for $299 and start shipping November 20. That means a device nearly as big as the iPad will sell for at least $100 less. A 7-inch HD model will sell for $199, starting next Friday. Movies will play in 720p on the 7-inch model and 1080p on the larger one.

The Fire, however, won't have as extensive a selection of apps as the iPad. In addition, while the HD models will have a front-facing camera for video chats, the iPad has one on the rear as well for taking photos and video.

A premium Kindle Fire HD model, one with the ability to connect to the 4G cellular networks that phone companies are building, will cost $499. It will come with 32 gigabytes of memory and an 8.9-inch screen.

A data plan with AT&T will cost $50 a year and come with a cap of 250 megabytes per month. Apple's 4G iPads with 32 GB cost $729, not including data plans with AT&T or Verizon Wireless.

Amazon's stock jumped $5.16, or 2.1 per cent, to close Thursday at $251.38. Earlier in the day, it hit a record high of $252.70.