Amazon's media content can already be watched via TVs, Blu-ray players, and other devices. The songs downloadable through the site are priced starting at $0.69 and can be streamed through the Cloud Player. Apps from Amazon's Appstore can be test driven in a sandbox before download.
Kindle Fire joins a crowded tablet market dominated by Apple's iPad, which is projected to have a 73.4 percent market share by the end of the year, according to research firm Gartner. Gartner expects worldwide tablet sales of 63.6 million units this year, a 261.4 percent increase from the previous year. Tablet sales should reach 326.3 million units by 2015, Gartner said.
The competitive pressure will be on other Android tablet makers more than the iPad, Daoud said. Android tablet makers are mostly hardware makers and lack software and services, and being a content and e-commerce enabler, Amazon is moving the needle forward for Android tablets, he said. Apple has a big user base, so the jury is out on how this tablet will impact the iPad, Daoud said.
Amazon's tablet could become the "only credible iPad competitor in the market," said Sarah Rotman Epps, senior analyst at Forrester Research in a blog entry last month. Amazon's Kindle e-readers and online store already are popular, and Amazon will use its entertainment offerings and cloud infrastructure to boost the tablet's appeal.
Amazon offers 100,000 movies and TV shows through its instant streaming service via deals with CBS, NBC Universal, Sony, and Warner Bros. On Monday, Amazon and Fox forged a deal to deliver TV shows and movies through Amazon's streaming service. Amazon offers 950,000 e-books that can be instantly downloaded or read through the Kindle Cloud service. Amazon also offers the Cloud Drive service, in which users get 5GB free to store music, videos, photos or documents, and the Cloud Player music streaming service.
The iPad has an attractive user interface and cohesive set of software, entertainment and services, which has given it an edge over rivals such as tablets based on Google's Android OS. Adoption problems have dogged Android tablets because of high prices and lack of software and services. But Amazon could sell 3 million to 5 million tablets by the end of the year, given the price of the Kindle Fire, Epps said, before the price was publicly known. She said then that if Amazon priced its tablet under $300 it could reach those numbers.
Bezos also debuted the Kindle Touch e-reader at the event. The Touch will cost $99 for customers willing to have ads pushed to then, $139 for those who want an ad-free model. It also will come in a 3D-capable version. Both will ship on Nov. 21.
The touch capabilities are based on infrared technology, which makes it easier to switch pages, he said. Tapping can also help switch pages in an e-book easily -- tapping the top side of the screen loads the menu, tapping the small area on the left side moves to previous pages, and tapping the lower right area moves a page forward. "When people do long-form reading, they love to switch hands," Bezos said.
The Kindle Touch tablet retains the e-ink display and has Wi-Fi. A Kindle Touch with 3G is priced at $149. A basic ad-supported Kindle is priced at $79 as of today, Bezos also announced.
(Joab Jackson in New York contributed to this report.) Follow tweets from Joab Jackson of IDG News Service at the launch event.