The Kindle Fires are coming!

The tablet wars are heating up, and Amazon.com's (Nasdaq: AMZN) Kindle Fire is burning up its Google Android brethren. Now, according to a recent Digitimes report, the e-tail giant is preparing to broaden its lineup with a slew of new models, while dropping the price of the existing tablet. The current 7-inch tablet features a 1024 x 600 screen and is expected to see its price cut from US$199 to US$149 in an aggressive move to steal market share from Apple's (Nasdaq: AAPL) dominant iPad.

First-generation Kindle Fire. Source: Amazon.com.

In its stead, Amazon is reportedly looking to release a new 7-inch tablet with a higher-resolution screen of 1280 x 800 to occupy the US$199 price point. The company plans on keeping a lower-resolution model at the US$149 entry-level price. On top of that, Amazon was also looking at 8.9-inch and 10.1-inch models, which would compete more directly with the iPad on features and pricing.

According to the dubious news outlet's sources, the 8.9-inch model has gotten axed and Amazon is now focusing its efforts on the 10.1-incher, targeting a fourth-quarter 2012 or first-quarter 2013 launch.

On the traditional e-reader front, the site believes Amazon is working on a 6-inch backlit model, which would be a response to Barnes & Noble's (NYSE: BKS) Nook with GlowLight.

Digitimes is about as shady as Far East supply chain leaks get, but this report actually makes a lot of sense. Amazon hit the ground running in the tablet market, and if it chooses to follow the standard annual refresh cadence, we're T-minus three months to the Kindle Fire's first birthday, so maybe some siblings are in order.

Just in time to crash the party
While the Kindle Fire remains among the best-selling Android tablets to date, Google is expected to unveil a new Nexus Tablet later this month, possibly at its Google I/O developer conference. That tablet is thought to see a price point between US$150 and US$200, squarely in Kindle Fire turf. Although that creates a tough proposition for third-party OEM partners that are looking to actually, you know, turn a profit on the hardware.

As we all know by now, Amazon sells the Kindle Fire at or above cost, relying on content sales down the road to pitch in to the bottom line, as all of the preloaded services point straight to Amazon's own content offerings instead of Big G's. Amazon even has its own Android Appstore to compete with Google Play.

Who's coming with me?
As far as ways to play the second generation of Kindle Fires, NVIDIA (Nasdaq: NVDA) is widely expected to have grabbed the processor spot with its quad-core Tegra 3, while Atmel (Nasdaq: ATML) might have landed the touchscreen microcontroller spot.

I'd also expect the new tablets to feature a more distinct form factor, as opposed to the relatively generic-looking current Kindle Fire that looks almost identical to Research In Motion's PlayBook, since both devices are made by the same contract manufacturer, Quanta. The first time around, Amazon outsourced design to get a device out the door in time for last year's holidays, but this year it's had more time, so it will probably revamp the design.

Besides, I doubt anyone wants to be associated with the PlayBook any more than necessary.

There's no "if" about it
Despite the questionable origin of the speculation, this rumor checks out. It's pretty obvious that Amazon will inevitably update and expand its Kindle Fire lineup. It's only a matter of when and by how much.

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