Amazon.com Inc (AMZN.O) introduced its eagerly-awaited tablet computer on Wednesday with a $199 price tag, potentially cheap enough to compete with Apple Inc's (AAPL.O) iPad.
The Kindle Fire tablet has a 7-inch screen, free data storage over the Internet and a new browser called Amazon Silk. It expects shipments to start on November 15.
"These are premium products at non-premium prices," Chief Executive Jeff Bezos said. "We are going to sell millions of these."
It also introduced the Kindle Touch, an e-reader with no buttons and a touch screen starting at $99. It also cut the price of its basic Kindle e-reader to $79 from $99.
Amazon shares rose 3.2 percent in morning trading, while Barnes & Noble (BKS.N), maker of the Nook e-reader, dropped 6.2 percent. Apple shares dipped 0.5 percent to $401.49.
Analysts expected the tablet to be priced around $250, roughly half the price of Apple's dominant iPad, which starts at $499. The Nook Color e-reader costs $249.
Having its own tablet is important for Amazon because the company has amassed a mountain of digital goods and services that could be sold through such a device.
As the world's largest Internet retailer, a tablet might also encourage Amazon customers to shop online for physical products more often.
Breaking into the tablet market will be difficult. Companies including Hewlett Packard (HPQ.N), Motorola Mobility (MMI.N), Samsung (005930.KS) and Research in Motion RIM.TO, have each launched tablets but none have taken a bite out of Apple's lead.
Apple dominates the North American tablet market, with 80 percent of the 7.5 million units shipped during the second quarter of 2011, according to Strategy Analytics. (Reporting by Alistair Barr in San Francisco and Phil Wahba and Liana Balinsky-Baker in New York; Editing by Derek Caney)