Amazon Kindle Fire turns up the heat on iPad and Android

The low cost and huge retail backing for Amazon's newly launched Kindle Fire will help the device compete with the biggest names in the tablet market, according to industry analysts.

The sizeable backing of Amazon's book and media retail services will draw consumers in for software purchases, and provide an advantage over hardware vendors that sell wholesale to retailers.

"This is a true tablet, but it is also a more focused device than any of the other true tablets," said Rob Enderle, principal analyst for the Enderle Group.

"Think of it as a digital storefront for Amazon. And the reason Amazon can offer such an aggressive price is that it expects buyers to primarily buy from Amazon."

Launched on Wednesday in New York, the 7in Kindle Fire costs just $199 and will ship in time for the holiday season, when analysts expect the device to perform well in the market.

"We have long maintained that media tablets are additive devices, not replacements for PCs, and that's why media tablet vendors, aside from Apple, have had trouble selling units at $500 and higher," said IDC analyst Tom Mainelli.

"By pricing the Fire below $200, Amazon gives cash-strapped mainstream consumers permission to own a third device (PC, phone and tablet) without having to justify its cost by attempting to use it to replace their PC."