Amazon ratchets the eReader price war up another notch today by introducing a new Kindle eReader for $139. What do buyers give up at that price? Only AT&T. Unlike previous Kindles, this one does not connect with subscription-free 3G to download media. Instead, wireless connectivity is exclusively via WiFi.

Ken Werner
Senior Analyst and Editor

Beyond that, the new product, which Amazon calls the Kindle Wireless Reading Device, does not look at all like a stripped-down loss leader. Like the previous-generation Kindle, the screen has a 6-inch diagonal and displays 600×800 pixels. But the new device uses E Ink’s new Pearl Vizplex imaging film, which has a contrast ratio of 10:1 (about 50% better than the previous Vizplex).

Compared to the previous generation, the wireless reader is 15% smaller, 17% lighter (at 8.5 ounces), and has double the storage. (Amazon says the reader is 21% smaller than the previous edition, but my calculation based on front surface area comes up with 15%.) Page turns are 20% faster, Amazon says. The display thickness is 1.2 mm.

Amazon CEO Jeffrey Bezos makes a strong case for not using a conventional touch screen on the wireless reader, citing the glare caused by current low-cost touch screens. (To see how much of the paper-like reading quality of Vizplex is sacrificed when a touch screen is placed on its front surface, compare the Sony Touch eReader with a non-touch model.)

Coincidentally, a client emailed me this morning to remind him about the display used in Apple’s iPad, and to ask about the displays he should expect to see in the second wave of tablets. To recap, the iPad uses a TFT-LCD from LG Display, which is 9.7 inches on the diagonal and uses wide-viewing-angle IPS technology. Word is that LGD is struggling to meet demand for the iPad display, which is significantly greater than Apple anticipated. Pixel dimensions of the display are 1024×768 (XGA), which is an appropriate choice for this application and screen size.

But what will follow the iPad in the third quarter? The next generation of tablets will go in (at least) three directions. One group will more or less emulate the iPad’s form factor and go with large displays in the range of 9.7 to 11 inches. The second group — and this is likely to include the first Nokia tablet on the MeeGo platform — will go in the direction of a more conveniently portable device with displays of 7 to 9 inches on the diagonal. The third group will be China cheapies that are essentially eBook readers with 6-inch (or sometimes 5-inch) LCDs and some netbook-like features.

All three groups will use LCDs of varying quality, but look for at least one device that uses Qualcomm’s 5.7-inch, video-rate, color mirasol display. Next year, we should see a LiquaVista electrowetting display added to the mix.

My client is particularly interested in new markets for AMOLED displays, and he asked if AMOLEDs can find a place in the tablet zoo. The answer is certainly yes, but not next week. Currently, Samsung Mobile Display (SMD) can’t meet demand for AMOLED smart-phone displays, and you can’t make medium-sized displays economically on the current Gen 3.5 and Gen 4 fabs. SMD’s and LG Display’s new Gen 5.5 AMOLED fabs are scheduled for ramp-up in 2012, and those fabs will be scaling up processing technology that has never been tried at such large substrate sizes. Both companies are pouring lots of resources into these projects — and LGD has been trying to accelerate the process by hiring SMD employees — so I wouldn’t say that either company will fail to pull this off in the end, but I would expect both companies to struggle with manufacturing yields in the beginning.

For now, let’s see what the tablet and reader wars bring forth in Q3.