On Sept. 28, Amazon launched its much-anticipated tablet. Christened Kindle Fire, the 7-inch tablet is priced at $199 and is available for pre-order, with delivery Nov. 15. Amazon has also significantly modified its kindle line of e-reader devices, with 6-inch non-touch B&W Kindle e-reader now available for $79, and the Kindle Touch ad-supported version for $99 and $139 without it.

Here are some basic specs of the newest addition to the tablet market:

The tablet had been expected to hit the market prior to the shopping season, and its timing has proven spot-on. At $199, it is the cheapest 7-inch tablet in the market except for Lenovo’s newly announced, but not yet launched, A1 tablet (running on Android), which is similarly priced.

The rest of the competition is at least $50 costlier, with both Samsung’s 7” Galaxy Tab and Blackberry’s Playbook costing $100 more. Apple’s iPad, with a 10.1-inch form factor, costs $500.

Pricing Strategy

So, why is Amazon able to sell so cheap? Well, the answer undoubtedly lies in the Internet behemoth’s ability to provide a complete eco-system of hardware, app and content all by itself. Amazon Prime members have access to all of Amazon’s streaming content with thousands of titles, with online cloud storage available for free.

Amazon also has a fully functional Amazon App Store of its own. Unfortunately, it predictably has no access to the open Android Market, managed by Google. This kind of restrictive software management is reminiscent of the hugely popular iPad. However, with Kindle Fire running an Android-based OS, a solution to running those Apps could be found before the tablet’s delivery starts.

Amazon Prime membership costs $79 per year and in addition to free two-day shipping, also offers customers access to Amazon’s fast expanding collection of titles. Amazon’s ability to sell Kindle cheap, while a continuation of its long-term policy of profits through quantity, is heavily aided by its earning from the Prime Membership program. The 30-day free trial of the program being offered with the device is ample indicator of Amazon’s strategy.

Missing Features

A couple of things missing from the device, compared to similar (albeit costlier) 7-inch Android tablets, are camera for video conferencing and microSD memory expansion slots. The lack of the latter is another indicator of Amazon’s efforts at carving a product line around its online content. However, this has the potential to be a deal breaker for people looking to fill their tablets with personal data not found on Amazon.

Effect on Competition

Kindle Fire has the potential to take over a significant portion of the 7-inch tablet market. The price point is much lower as compared to some key competitors in the segment. However, it is unlikely to eat into iPad’s share of the tablet market. The two devices, priced at $200 and $500 respectively, could well turn out to be the market leaders in the long run.