Amazon Kindle Fire: Against iPad, Battle of the Tablets

PHOTO: The new Amazon tablet called the Kindle Fire is displayed, Sept. 28, 2011 in New York City.
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Amazon, the giant online retailer, today announced its new Kindle Fire -- a seven-inch, 14.6-ounce tablet computer that everyone in the tech industry immediately tried to size up against Apple's wildly-successful iPad.

The first reaction: The Fire is not an iPad. But at the prices Amazon announced, it is a steal.

Amazon chief Jeff Bezos said the Fire would be far cheaper than the iPad, with a starting price of $199. Apple's cheapest iPad is $499. The Fire will not have a built-in camera or microphone, or a 3G cellular connection, but would connect seamlessly via Wi-Fi to Amazon's online offerings, which include 100,000 movies and TV episodes, and 17 million songs for download.

The Kindle Fire, which will start shipping to customers on Nov. 15, will have a dual-core processor and a multi-touch display, Bezos said. If you fill the Fire's memory or worry about losing what you've downloaded, Amazon will offer free storage in the so-called cloud, meaning that media you buy will be kept for you online.

Bezos used the day to announce three new products in all, including a new version of the company's e-reader, called the Kindle Touch. Starting price: $99 if you only use a Wi-Fi connection to download books, $149 with a 3G connection.

A version of the original Kindle, lacking the touch feature, will sell for $79.

"Meet the family," said Bezos at Amazon's product rollout in New York. "These are premium products at non-premium prices."

Analysts said Amazon's tablet is less capable than Apple's iPad -- but the bargain price is likely to attract people who were unwilling buy a tablet before. HP tried to sell its TouchPad tablets this summer, and considered them a failure -- until it offered them for a clearance price of $99 and they flew off the shelves.

"This is about content consumption; this isn't an iPad comeptitor," said Michael Gartenberg of Gartner research. "The iPad has a 10-inch screen, it has a lot more memory, it has 3G, it can do my presentations. IPad is about productivity as well as consumption. (Kindle) is about consuming Amazon services, movies, etc."

Bezos had anticipated that kind of reaction. "We don't think of the Kindle Fire as a tablet. We think of it as a service," he said.

Amazon's low-low prices have strings attached, though. Visitors at the announcement noticed advertisements on the screens of the Kindles on display. The company said they "come with special offers and sponsored screensavers that appear when you're not reading."

If you don't want the ads? Amazon said the Kindle price rises from $79 to $110, and the Kindle Touch base model rises from $99 to $139. The Fire, which does not show you screensaver ads, remains at $199.

Wall Street seemed to like what it saw; Amazon stock rose 3 today. Stock in Barnes & Noble -- with its Nook e-reader -- fell 7 percent.

ABC News' Aaron Katersky and Andrea Smith contributed to this story.

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