Amazon to launch new weapon in tablet battle

By Alistair Barr

SAN FRANCISCO (Reuters) - Amazon.com Inc is expected to launch a new tablet on Thursday, the latest salvo in a battle for control of mobile access to the Internet.

Amazon is expected to announce at least one new version of its 7-inch Kindle Fire at a press conference near Los Angeles. A larger tablet may also be unveiled, along with an update of the company's popular Kindle e-reader.

"The swing factor in the expectation on the upcoming Kindle Fire could be on how much lower pricing can go," said So Young Lee, an analyst at SunTrust Robinson Humphrey.

Amazon is willing to make little or no money selling 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.

More broadly, Amazon is fighting with Apple Inc, Google Inc and other technology giants for a foothold in the booming tablet market because these devices are fast becoming the preferred tool to access the Internet. As the world's largest Internet retailer, it is essential for Amazon to have a major presence in this new sector.

"A successful tablet is much more important for Amazon than Google," said Chad Bartley, an analyst at Pacific Crest Securities.

Amazon is one of the leading sellers of physical books, CDs, DVDs and video games. But these products are going digital, so the company is moving quickly to make sure it keeps its share of this evolving market.

"Amazon has to have devices that let customers purchase and consume digital content," Bartley said.