As well as targeting Apple’s iPad, Amazon is likely to have its sights on rival bookseller US Barnes & Noble, which already has a colour tablet.
The Kindle Fire will enter a hugely competitive market, dominated by Apple’s iPad who currently have 80% of the tablet market.
Amazon will be hoping to leverage both the strength of the Kindle brand, built up over three generations of its popular e-book reader, and its ability to serve up content such as music and video.
In recent years, the company has begun offering downloadable music for sale, and also has a streaming video-on-demand service in the United States. Those, combined with its mobile application store, give it a more sophisticated content “ecosystem” than most of its rivals.
Amazon Kindle Fire Facts
7″ IPS (in-plane switching) display
1024 x 600 resolution
Customised Google Android operating system
Weighs 413 grammes
Dual core processor
8GB internal storage
Amazon sees the hardware almost as a loss leader who can make their money by selling content whereas Apple profit from hardware sales and software sales are a “nice to have”.
Digital content has already proved itself to be a money-spinner for Amazon.
Although the company has never released official sales figures for the Kindle, it did state – in December 2010 – that it was now selling more electronic copies of books than paper copies.
Its US rival, Barnes & Noble, has also enjoyed success with its Nook devices.
In October 2010, the company unveiled the Nook Color, which also runs a version of Android, albeit with lower hardware specs than many fully featured tablets.
While the Nook Color is largely focused on book and magazine reading, some users have managed to unlock its wider functionality and install third-party apps.
Kindle Touch Amazon has dropped the keyboard from some of its Kindles in favour of touch
The Kindle Fire’s £130 price tag undercuts the Nook Color by £30 and is significantly cheaper than more powerful tablets from Apple, Samsung, Motorola and others.
It is due to go on sale on 15 November in the US, although global release dates are currently unavailable.
“These are premium products at non premium prices,” said Amazon chief executive Jeff Bezos. “We are going to sell millions of these.”