Amazon announced a third generation of its Linux-based Kindle e-reader, featuring a lighter and smaller body, a screen claimed to have 50 percent better contrast, and a battery life of up to one month. Still available with 3G, the device is also offered in a Wi-Fi-only version that includes a WebKit-based browser, the company says.

According to Amazon, its third-generation Kindle features a six-inch E Ink screen with 50 percent better contrast, a body that's 21 percent smaller and 15 percent lighter, an advertised battery life of up to one month, and double the storage capacity. Those with an aversion to white can now order the Kindle in a graphite-gray color, the company adds.

Amazon's downsized Kindle comes in graphite as well as white
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Amazon says it has also worked to increase the Kindle's capacity as a personal-document device: in addition to highlighting, note-taking, Wikipedia access, and dictionary lookup, the Kindle now supports password-protected PDFs. In what the retailer terms an experimental feature, the device also includes a WebKit-based browser, free to use over Wi-Fi.

It's said both the third-generation Kindle, which retails for $189, and the new Kindle Wi-Fi, which retails for $139, will ship on Aug. 27.

In the hours leading to Amazon's announcement, the retailer's Kindle page listed the device as "temporarily out of stock." Speculation abounded about whether Amazon had indeed sold out the device, following its recent price-drop, or if the decks were being cleared for a hardware refresh.

Amazon claimed early in July that Kindle e-books have been outselling hardcover books at an increasing rate, and that the Kindle's price drop had resulted in similarly accelerated sales.

The Kindle Wi-Fi's $139 price point undercuts that of the Nook Wi-Fi, which retails for $149.

Amazon's new Kindle (left) alongside the older version
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Amazon faces a variety of competitors in the space: from Google and its plans to launch e-book rival Google Editions; from e-readers such as the Nook, which have been consistently upgrading their software and hardware offerings; and from publishers, who could use those competitors' presence as leverage in negotiations. But Amazon's biggest challenge could be the Apple iPad, which at least one analyst estimates as having a larger ownership base than the Kindle.

"Last night, Apple stated it has shipped 3.27 [million] iPads since the April product launch, surpassing our estimate for an installed base of [around 3 million] Amazon Kindles to date despite supply constraints," Marianne Wolk, an analyst with Susquehanna Financial Group, wrote in a co-authored July 21 analyst report. "As [Apple's] supply constraints ease, Apple iPad shipments should ramp and it could ship as many as 12-15 [million] iPads in 2010 — a compelling base for publishers to consider."

Although Amazon has argued that the Kindle's E Ink screen offers a better reading experience and superior battery life to backlit tablets such as the iPad, it has also been aggressive in pushing a Kindle e-reader application to the iPad, PCs, and a variety of mobile devices.

Despite the Cold War between e-readers over added features and lowered costs, some analysts suggest there may be a limit to how low Amazon and Barnes & Noble can take their devices' price-points.

"With these cuts, eBook readers from Barnes & Noble as well as Amazon now are priced at about the break-even level with their Bill of Materials (BOM) and manufacturing costs," William Kidd, director and principal analyst of financial services for iSuppli, wrote in a June 24 statement following price-dips for both the Nook and Kindle. "With zero profits on their hardware, both these companies now hope to make their money in this market through sale of books."

Further information

More information on the third-generation Kindle may be found on Amazon's website, here.

Nicholas Kolakowski is a reporter for our sister publication, eWEEK.

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