Amazon introduces new Kindle Fire, starts at $159

Amazon.com Inc showed off a larger, higher-end Kindle Fire on Thursday, for $299, taking aim at a fast-growing market now dominated by rival Apple Inc .

Chief Executive Jeff Bezos, taking the stage in Santa Monica, California, unveiled an 8.9-inch version called the Kindle Fire HD, as well as a smaller 7-inch version that will sell for $159.

Bezos on Thursday stressed 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 Inc 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 $179 starting in October, in time for the crucial holiday season. A wifi-only version will go for $119, and the cheapest will carry a $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 $249.