Septemeber 5th, 2012— Amazon.com Inc is expected to announce the newest version of their Kindle Fire at their press conference Thursday in Santa Monica, Calif.  News of the conference has circulated hundreds of rumors and it finally looks like Amazon will be introducing a larger tablet and updated version of their popular Kindle e-reader.

Amazon surprised competitors and investors last year by unveiling their first tablet priced at $199, well below Apple’s iPad. Although reviews were tepid at first, Amazon’s tablet has gone on to sell extremely well cutting into the U.S tablet market. The arena for tablets has skyrocketed as Amazon Inc, Apple Inc and Google Inc  battle for a foothold in the tablet marketplace.

Because these devices are becoming the preferred method of accessing the internet,  it’s vital for Amazon to command a major presence in this marketplace. As products like books, CDs, and DVDs go digital, offering devices that let customers purchase and consume digital content is essential.

“A successful tablet is much more important for Amazon than Google,” said Chad Bartley, an analyst at Pacific Crest Securities.

Despite Google selling their 7-inch Nexus 7 tablet for $199 with better specifications, Amazon.com may cut the price of the new Kindle further by offering an ad-supported version. Amazon currently does this with some of their e-readers like the $79 Kindle with Ads, as opposed to the same version without ads at $109. The cost to make the Kindle Fire has lowered since it’s launch, helping Amazon to cut their prices competitively.

“The swing factor in the expectation on the upcoming Kindle Fire could be on how much lower pricing can go,” said So Young Lee, an analyst at SunTrust Robinson Humphrey.

Amazon’s objective is to get these devices into as many hands possible and they are willing to make little to no money selling tablets and e-readers. The higher margin is in selling content like e-books, videos, games, apps and music to help keep users connected with Amazon.

Amazon recently announced an agreement with EPIX to stream thousands of new release movies with Amazon Prime Instant Videos for Prime subscribers.