Amazon unveils iPad competitor

Retailer releases Kindle Fire, Touch tablets

Amazon just delivered an early holiday gift to Hollywood.

The e-tailer’s decision to compete for a piece of the tablet biz with three new Kindles guarantees studios a surge in sales of digital movies and TV shows, as well as music, games and books for record labels and publishers when the devices start getting into consumers’ hands Nov. 15.

Amazon already gets much of the credit for growing the e-books industry with its Kindle. And millions of early adopters are expected to pick up its new seven-inch touchscreen, the Kindle Fire, through pre-orders taking place now.

But Amazon is expected to reach an even broader audience with its tablet, given its $199 pricetag, half the cost of Apple’s cheapest iPad.

Should that happen, the Fire will serve as an important tool in getting more consumers to store more of their purchased content in cyberlockers, since all content on the new Kindles will be stored using Amazon’s Cloud system.

Amazon has long declined todisclose just how many Kindles it has sold, but last year insiders at the company estimated that it had moved 8 million units out the door. In the first 73 days of last year’s holiday quarter, the company said it sold more Kindles than during all of 2009.

Apple still dominates with 75% of the tablet market. It’s expected to sell 22 million iPads this holiday alone, analysts say.

Yet the Kindle Fire means another high-profile screen in the hands of consumers on the go who are proving willing to open their wallets for content.

The electronic sale of entertainment generated $683 million last year, up 16% over 2009, while VOD rentals earned $1.8 billion, up 21%, according to the Digital Entertainment Group. For the first half of the year, the electronic sell-through category was up 4% to $270 million, while VOD grew another 4% to $929 million.

What will help spur sales of additional content is Amazon’s clout as the top online retailer, which will put considerable marketing muscle behind the Fire in the way it has pushed previous Kindles with high-profile splashes on its homepage.

What’s more, Amazon is not making the mistake, as many other competitors have, of attempting to simply clone Apple’s product. The company also is clearly hyping the content available for the system rather than the hardware itself (other tablets have been criticized for being light on content).

Having the content is key.

Amazon has been steadily building its partnerships with studios in recent months to expand its video offerings, with the aim of igniting interest from consumers in the Fire for its launch.

Earlier this week, it announced a deal with Fox, adding fare such as “The X-Files,” “Buffy the Vampire Slayer,” “24” and “Arrested Development” to the $79-a-year Amazon Prime lineup. It will also add a few exclusives, such as “The Wonder Years.” In late July, it added NBCUniversal Domestic TV Distribution (and titles such as “Eternal Sunshine of the Spotless Mind,” “Elizabeth” and “Gosford Park”) to its collection.

Upon launch, the Kindle Fire will offer more than 18 million pieces of content, made up of more than 100,000 movies and TV shows through Amazon Prime; more than 17,000,000 songs from Amazon MP3; more than 1 million Kindle books; 100 exclusive graphic novels; and, of course, games like “Angry Birds.”

Since it runs on a heavily modified Android operating system, the Kindle Fire also has access to all of the games available to that system through the Android App store — including “Angry Birds,” “Fruit Ninja” and “Cut the Rope.” That’s critical in the tablet wars, as users of the iPad have shown a keen interest in entertainment apps, especially games.

Amazon has also struck deals with hundreds of newspapers and full color magazines. Kindle Fire customers will receive a free three-month trial to 17 Conde Nast magazines, including Vanity Fair, GQ and Glamour.

All programming will use Amazon’s Whispersync technology, letting a person watch part of a program on their tablet, then pick up where they left off at home on a television.

The tablet will also come with a proprietary Web browser, bypassing standards like Microsoft’s Internet Explorer, Firefox and Google Chrome. Amazon Silk, as it’s called, will again leverage the company’s cloud technology to more quickly render pages.

The Kindle Fire “brings together all of the things we’ve been working on at Amazon for over 15 years into a single, fully-integrated service for customers,” said Amazon-topper Jeff Bezos during a New York press event Wednesday. “We’re building premium products at non-premium prices.”

Beyond the tablet, Amazon dramatically expanded its lineup of Kindle eReaders, announcing a pair of touchscreen devices (3G and WiFi) that do away with the keyboard and buttons on previous-generation models. The new systems also feature a longer battery life and the most advanced eInk display the company has ever used, Bezos said.

And like the Kindle Fire, they’re priced to sell.

The WiFi Kindle touch will cost $99, while the 3G version will run $149. (The 3G will work in 100 countries, Bezos noted, and will not carry any monthly fees.) Pre-orders on the device started Wednesday, and units will begin shipping Nov. 21.

The new Kindle touch will also ship with a new feature called X-Ray, allowing a person to do in-depth research on terms that catch his interest while reading. While current Kindles allow people to look up words, X-Ray will show them facts, including Wikipedia entries, which are downloaded with the book or magazine texts.

For users who prefer a physical keyboard, Amazon is also dropping the price of the Kindle to $79. The system will be slightly different than the current Kindle 3, weighing 30% less and boasting a smaller frame but retaining the same screen size.