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Amazon Kindle Fire sells out as new model expected for holidays

NEW YORK -- Amazon.com Inc. says it has sold out of its Kindle Fire tablet computer amid expectations of a new model for the holiday season.

The Internet retailer has a major news conference scheduled for next Thursday in Santa Monica, California. It's widely expected to reveal a new model of the Fire there, so Thursday's announcement that the first model is “sold out” suggests that Amazon halted production a while ago to retool for a new model.

Amazon launched the US$199 tablet last November. It was the first Kindle with a color screen and the ability to run third-party applications, placing it in competition with Apple Inc.'s iPad, at half the price of the cheapest iPad.

Amazon doesn't say how many Fires it has sold, but says it captured 22 percent of U.S. tablet sales over nine months. That would make it the second-most popular tablet, after the iPad. Tom Mainelli at research firm IDC said that figure matches his estimate of 6.7 million Fires sold, all in the U.S.

The Fire, which is about half the size of the iPad, could face a tougher challenge this holiday season. Many analysts expect Apple to introduce a smaller, cheaper iPad to take on the threat of the Kindle Fire and reach buyers who can't afford a full-sized iPad. In addition, Google just launched its own Kindle-sized tablet, the Nexus 7, and is selling it for US$199.

Amazon kept the price of the Kindle Fire low by keeping it small, stripping it of features and taking a small or zero profit margin. Its strategy is to make the Fire a means for people to buy more e-books, music and movie downloads from the Amazon store, which is intimately linked to the device. That's a contrast to the strategy of Apple, which sees content sales as a sideline and wants to make a profit on every device sold.

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