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Amazon.com Inc. (AMZN) has recently announced the shipping of its 8.9 inch Kindle Fire high-definition (HD), a little earlier than the scheduled date. This is a strategically conceived time for shipping, just ahead of the peak holiday shopping season.

Priced at $299, the 8.9 inch Kindle Fire HD comes with dual band Wi-Fi connectivity and MIMO technology that enables streaming and downloading videos at a faster pace. The model features a 1,920x1,200 HD display with 254ppi, as well as a front-facing HD camera.

The new Kindle Fire HD also has an X-Ray feature, which will provide useful insight about books or movies to the users. Besides, Kindle Fire HD will also include an upgraded version of Immersion Reading that will allow the user to hear narration by a popular actor while reading a book.

The tablet can be ordered at Amazon's site or at Best Buy Inc. (BBY). It will also be available at other retail chains in the coming weeks.

Additionally, the company expects to start shipping the LTE version of the 8.9-inch Kindle Fire HD tablet to next week. This version is available with a 4G LTE data package that costs $49.99 for the first year of service.

The tablet market is getting more and more competitive. Apple Inc. (AAPL) leads the race so far in this market, but Amazon’s lower-priced Kindle Fire has also seen very strong demand. Other players like Google (GOOG) and Microsoft (MSFT) have also stepped in to grab a share of the pie.

We view Amazon’s expansion into the tablet market as a defensive move, designed to protect its leading share of the e-reader market and maintain sales of books and other digital products through the Kindle platform. Even if Amazon does not make big money from tablets, it will increase the number of customers buying and streaming content from Amazon through the product, thus increasing its revenue.

At the same time, we think there is a certain amount of uncertainty regarding Amazon’s investment plans, which could continue over the next few quarters. While it is true that these investments are going to drive the next phase of its growth, near-term earnings will remain under pressure.  

Currently, Amazon has a Zacks #4 Rank, which implies a Sell rating in the near term.

 
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