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A reporter holds the new Amazon Kindle 2.0 at an unveiling event at the Morgan Library & Museum February 9, 2009 in New York City. - 

UPDATE: This morning, Amazon formally announced the release of its Kindle Fire tablet. The device will feature a 7-inch screen and cost $199 -- far below the Apple iPad price of $499. It will run on Google's Android software, with a easier-to-use interface. While it will have Wi-fi connectivity, it lacks 3G access, as well as a camera or microphone built-in.

Steve Chiotakis: Amazon's expected to unveil it's new e-reader this morning. The new Kindle "Fire"
is expected to be much more like a tablet, yet cost much less than an iPad.

But as Marketplace's Jennifer Collins explains, it's all about the content.

Jennifer Collins: Developer Eric Wise has created dozens of apps for the iPad, including "Cowboys and Aliens: The Kids," an interactive book that teaches children how to read.

Eric Wise: So you could swipe any of these words.

Book: While.

Wise: If you hit it twice.

Book: W-H-I-L-E.

It spells the word. iTunes sells the app for $2 -- pretty typical prices. Wise thinks Kindle users would be willing to spend more for apps like this that feel more like books.

Wise: Because they're already used to spending that kind of money on a device for a single book, they would buy an app, in most cases, for a premium.

At less than $300, analysts say Amazon's new Kindle could be the first serious competitor to the iPad. They predict Amazon may sell as many as five million devices by the end of the year.

Laura Didio: What that means is that Amazon's application and content sales are going to explode.

Tech analyst Laura Didio says that's where Amazon really makes its money: on books, music, films and other content. The Kindle is mostly a delivery system.

I'm Jennifer Collins for Marketplace.