Bezos also took the opportunity at a New York press event to introduce a new line of Kindle e-readers with black-and-white screens and lower prices, further pressuring competitors like Barnes & Noble Inc. that are trying to break Amazon.com Inc.'s dominance in electronic book sales.
The Kindle Fire will go on sale Nov. 15. It's about half the size of the iPad, making it a close match with Barnes & Noble's Nook Color tablet, which came out last year. But while Barnes & Noble sees the Nook Color as jazzed-up e-reader, Amazon has broader goals for the Fire, as a platform for games, movies, music and other applications.
Compare the specs of the Kindle Fire and the Apple iPad2
Even before its release, the Kindle Fire was heralded as a worthy competitor to Apple's iPad. Amazon is nearly unique in its ability to sell content such as e-books, movies and music suited for a tablet - just like Apple Inc. does.
Still, competing with Apple won't be easy. Many have tried to copy the iPad's success, but it remains the overwhelming front-runner in the tablet computer category. Apple sold 28.7 million of them from April 2010 to June 2011. Analysts at research firm Gartner Inc. expect the iPad to account for three out of four tablet sales this year.
"Some of the companies that have made tablets and put them on the market ... the reason they haven't been successful is because they made tablets. They didn't make services," Bezos said in an interview. "So what we've done is really integrate seamlessly all of our media offerings - video, movies, TV, apps, games, magazines, games and so on."
Forrester Research analyst Sarah Rotman Epps said selling all that content makes the Fire is the only credible competitor to the iPad this year.
"In theory, Sony could do something similar, but they haven't, and it doesn't look like they will. They have a tablet, but they only went halfway on the services," she said.
Analysts had expected the Fire to go on sale for about $250. Epps called the $199 price "jaw-droppingly low," and said it would introduce tough competition not just for Apple, but for contending tablet makers like Samsung Electronics Co., Motorola Mobility Holdings Inc. and HTC Corp.
Analysts had speculated Amazon would subsidize the tablet, counting on making back some money through book and movie sales. But Bezos said the company is content with a slim profit margin.
"We want the hardware device to be profitable and the content to be profitable. We really don't want to subsidize one with the other," Bezos said in the interview with The Associated Press.
Epps believes Amazon will sell 3 million to 5 million Fires before the end of the year, but the late shipping date will probably skew the figure to the lower end of the range, she said.
The Fire runs a version of Google Inc.'s Android software, used by other iPad wannabes, and will have access to applications through Amazon's Android store. It lacks the cameras sported by practically every competing tablet. It also lacks a slot for memory expansion, a common feature on other Android tablets.
Amazon's cheapest new Kindle will cost $79, and dispenses with the keyboard the Kindles have carried since the first model launched in 2007.
For $99, Amazon is also bringing out the first black-and-white Kindle with a touch screen; it's reminiscent of Barnes & Noble's latest Nook. A version with access to AT&T's cellular network will cost $149. Versions without advertising cost an extra $30 to $40.
Bezos said the models subsidized by advertising have been the most popular.
Previously, the cheapest Kindle cost $114, with advertising. That price was reduced Wednesday to $99.
Bezos said he doesn't see the Fire as eventually replacing the Kindles.
"What will happen is people will buy both. Because they're really for different purposes.... For people who are into reading, it makes sense to have a device that's purpose-built," he said.