Updated: Amazon Stunner: New Kindle Tablet Will Go For $199

Amazon (NSDQ: AMZN) unveiled its new Kindle Fire this morning, and it will be priced at $199, well below Apple’s iPad, which dominates the still-nascent but fast-growing tablet market.

Amazon CEO Jeff Bezos confirmed details of the tablet during a press conference in New York attended by a swarm of reporters and members of the tech and publishing industry. As was widely expected, Amazon’s gadget has a 7-inch screen — more like the company’s current Kindle device than Apple’s 9.7 inch iPad — and is powered by the Android operating system. It will ship on November 15th, and be available for pre-orders today, but only in the U.S.

The price point is huge differentiator for the Kindle Fire, as the iPad 2 and other upscale tablets retail for over $500. The low price suggests that Amazon intends to use the device to drive sales to its website rather than as a profit-maker in its own right. This inaugural edition of the Kindle Fire is believed to be a stop-gap product to help Amazon enter the market while it puts the finishing touches on a 10 inch device that will emerge as its flagship tablet sometime next year. Amazon also confirmed that it is loading up on content through partnerships with magazine leaders Hearst, Conde Nast and Meredith.

Earlier this year, Forrester predicted that Amazon could sell between 3 million and 5 million tablets during the holiday season if they could get the price below $300.

Before getting around to the tablet, Amazon also unveiled two new versions of the Kindle e-readers called the Kindle Touch and cut the price of a bare-bones Kindle without a keyboard to $79. The touch-screen Kindle Touch will be available in a $149 version with a free connection to 3G networks, while another Kindle Touch will be available for $99 that connects to the basic Whispernet network. Of those devices, only the $79 Kindle will be available outside the U.S., with plans to ship in the U.K. and Germany.

“We’re going to sell many millions of these,” Bezos said during the press conference. “What we’re doing is offering premium products and offering them at non-premium prices.”

But the star of the day was unquestionably the Kindle Fire, a device which many in the tech and publishing industries think could give the iPad a real run for its money. Kindle Fire users will have access to 100,000 movies and TV shows as well as 17 million songs, Bezos said. Content will be stored on Amazon’s servers and automatically backed up through cloud-storage services.

It’s not just a media-consumption device, however. Bezos introduced a new browser called “Amazon Silk,” which he touted as a modern approach to mobile Web browsers through its link to Amazon’s back-end cloud-computing services. The browser splits the workload between the actual device itself and Amazon’s EC2 servers, according to a video describing the technology behind the browser.

Kindle Fire owners will receive a 30-day free subscription to Amazon Prime, which gives Amazon customers free two-day shipping on products bought through the store and access to movies and television shows. They’ll also get a three-month subscription to magazines from Conde Nast such as Vanity Fair and Glamour.