Kindle Fire: Amazon ignites the tablet market

Amazon has unveiled its long-awaited tablet computer – the Kindle Fire – in what is expected to be the biggest challenge yet to the dominance of Apple's iPad.

The online retail giant showcased its 7in colour screen tablet computer in New York on Wednesday, with a retail price less than half that of Apple's best-selling device. However, the iPad has a larger screen at 9.7in.

The Kindle Fire, which is based on Google's Android software, will retail for $199 (£127), compared to the cheapest iPad at $499. Unlike the iPad 2 and many other tablet devices, the Kindle Fire does not have a camera or mobile internet access.

Amazon also announced a new Kindle model with a touchscreen, very close to the design of the latest Barnes & Noble Nook e-reader.

The Kindle Touch has a black-and-white screen, consistent with current Kindle models, and will cost $99. The non-touchscreen Kindle will cost $79, and a touchscreen Kindle with 3G internet access will cost $149.

Jeff Bezos, founder and chief executive of Amazon, will aim to replicate the success enjoyed by its Kindle e-reader, which is the online retailer's best-selling product.

Expectations are high for Amazon's device. Forrester research estimates that the Kindle Fire will sell between 3m and 5m units in its first year, compared to 9.3m iPads sold between April and June.

The Kindle Fire comes with a 30-day free trial of Amazon Prime, the company's premium membership service that will allow users to stream videos and free delivery of goods bought via Amazon.

The Kindle Fire will ship in the US from 15 November and the Touch from 21 November. The Fire and Touch will be available only in the US.

Amazon is the second largest retailer of digital music in the US, behind Apple, and the Kindle Fire is aimed at streamlining the sale of music, and also magazines and movies.

Amazon dominates the e-reader market with around a 50% share and sold about 3m Kindles in the fourth quarter of 2010, according to figures from research company IDC, but has never released any formal sales figures for the device with the black-and-white screen.