Another week, another round of rumors from Digitimes’ well-connected sources in Taiwan. According to the usual manufacturing chain insiders, Amazon is planning to launch not one, but two new tablets in 2012, including a new 10-inch Kindle tablet.

A previous story ran by Digitimes in November suggested that Jeff Bezos set his sights on an 8.9-inch model, spurred by the initial success of the 7-inch Kindle Fire. But things appeared to have changed since last year, and now Amazon hopes that it can deliver a successful 10-inch model, that customers would perceive as a worthy alternative to Apple’s freshly launched “new” iPad. And the situation is even more interesting in the low-cost 7-inch tablet scene.

Is the Kindle Fire Losing Steam?

The Kindle Fire sold incredibly good, by far outpacing established Android competitors, like Samsung or ASUS. According to an IHS iSuppli report from February, over just one quarter, Amazon managed to move about 3.9 million Kindle Fires (14% market share), enough to become the number two tablet vendor in Q4 2011, and number three in 2011 (behind Samsung).

However, Digitimes Research estimates that the Kindle Fire is losing steam, with only 1.5 million units forecasted to be shipped in the first three months of 2012. Among the possible explanations for the slowdown, we can mention the post-holidays market slump and the arrival of new competitors, some of which are priced competitively. For example, ASUS launched the Transformer Pad 300, and announced an amazing $249 MeMo quad-core tablet for later this year.

Even the release of the new iPad may play a role, although the iPad is not a player in the low-cost tablet sector. But Apple did cut the price of the iPad 2 to $399, which may have caused at least some potential buyers to give up on the Kindle Fire.

Another unknown factor to be considered is Google’s expected entry in the low-cost tablet market, presumably with its own Nexus tablet. According to rumors reported by AndroidAndMe, Google is about to unleash a quad-core Nexus tablet that will be priced at $199, the same price as the Kindle Fire.

Amazon to Revamp 7-inch Kindle Fire, Launch 10-inch Tablet in Q2 2012

Faced with the impending arrival of a Fire-killer (the $199 Google Nexus tablet), Jeff Bezos knows that, in order to capitalize on the head-start it has, Amazon really needs to up the ante. Some have even speculated that the 7-inch Kindle Fire was a “beta” for the future 10-inch model, an unfinished product that Amazon rushed to the market in order to gain a foothold on a battlefield that is dominated by the iPad.

Digitimes’ report claims that, in the second half of 2012, we will see two new tablet devices from Amazon. One of them will be a revamp of the 7-inch Kindle Fire, which will probably come with a better processor, a modified designed, and, possibly, a better screen. Amazon’s 10-inch tablet is also getting closer to reality – the device is reportedly built by Foxconn, and the first shipments are expected in the second quarter of 2012.

The low-cost battle becomes dramatic

For everyone involved in the tablet industry, things are getting complicated. Even Apple, which singlehandedly created the tablet market from scratch, can expect trouble ahead. After all, the iPad’s market share dropped to around 60% after the release of the Fire. Cupertino is aware of this dangerous trend, and plans to counteract it with a supposed 7-inch iPad Mini.

But the real battle is being waged at the lower level – the $200 price floor that proved so attractive to tablet shoppers. With Google finally serious about entering the tablet game, and the rest of the Android team working hard, as well, Amazon has its work cut out in 2012. We’ll see how things turn out in a short few months, when both Google and Amazon are rumored to show off their new budget-friendly tablet devices.

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