Amazon unwraps larger Kindle Fires

Amazon CEO Jeff Bezos holds up a Kindle Paperwhite during Amazon's Kindle Fire event in Santa Monica, California September 6, 2012. (Credit: Reuters/Gus Ruelas)

Linked gallery: Photos: Amazon's iPad rival, the Kindle Fire HD

Amazon.com has shown off larger and higher-resolution Kindle Fires costing as much as US$499 ($485), taking aim at a fast-growing market now dominated by rival Apple.

Chief Executive Jeff Bezos, taking the stage in Santa Monica, California, unveiled an 8.9-inch version called the Kindle Fire HD.

The costliest, 4G-ready version will go for US$499, while a Wi-Fi version is US$299.

The cheapest, 7-inch version of the Fire, which launched in November and is now the No. 2-selling tablet in the United States, behind Apple's iPad, will go for US$159.

"Amazon is clearly spooked by Google's Nexus 7 coming in at US$200 for a much more capable device, and it's upped its own hardware specs while reducing the price to US$159, which is clearly an attempt to keep it somewhat attractive in the face of that new competition from Google and Asus," Ovum's chief telecoms analyst Jan Dawson said.

The high-end 4G version contains a "4G LTE 10 band wireless modem with HSPA+, HSDPA, and EDGE/GPRS fallback", according to published specs.

Amazon also claimed its tablet was the first to "feature dual wifi antennas and Multiple In/Multiple Out (MIMO) technology".

Bezos said that Amazon saw the Kindle family of e-readers and tablets as a service, with hardware a critical element of its digital content business.

Amazon is competing with Apple, Google and other technology companies for a foothold in the booming mobile-device market, because these devices are fast becoming the preferred tool to access consumer media over the Internet.

As the world's largest Internet retailer, it is essential for Amazon to have a major presence in this new sector.

Amazon is willing to make little or no money selling cheap tablets and e-readers because it wants to get the devices into as many hands as possible, then sell higher-margin digital content, such as e-books, video, games, apps and music, to a more connected and engaged customer base.

On Thursday, the company also showed off a "paperwhite" e-reader with a much sharper screen and longer battery life.

The 3G wireless version that made digital readers mainstream will sell for US$179 starting in October, in time for the crucial holiday season.

A Wi-Fi-only version will go for US$119, and the cheapest will carry a US$69 price tag -- undercutting the cheapest Barnes and Noble Nook.

Shares in Amazon, which hit a high earlier on Thursday, were up 1.1 percent at US$249.

(Reporting By Lisa Richwine and Ron Grover in Santa Monica and Alistair Barr in San Francisco; Editing by Gerald E. McCormick and M.D. Golan)