Amazon.com Inc. (NASDAQ.AMZN), the world's largest online retailer, has unveiled its third-generation e-reader Kindle which is smaller, lighter, faster and, overall, better – in other words, ready to challenge Apple Inc.'s (NASDAQ.AAPL) popular tablet computer, the iPad.

The latest Kindle, launched Wednesday, is a slimmed-down version of its predecessor, with Amazon claiming that it's "21 percent smaller and 15 percent lighter."

The device, Amazon said, is 20 percent faster and has double the storage space – 4GB - compared to earlier models, so it can hold up to 3500 books.

The new Kindle, the company said, also has a better display – with the contrast on the screen 50 percent better, texts appear sharper and clearer.

The battery life of the device has also been improved - with wireless settings off, the new Kindle can go now for a month without a charge. The earlier Kindle or Kindle 2 could last for 2 weeks without needing a recharge.

The buttons in the new Kindle are also different from the earlier version. In the new Kindle, the Home button has moved to the bottom of the keyboard, and the joystick navigation cluster of Kindle 2 has been replaced by a D-pad like approach with a 5-way navigation square, with an oval Menu button above it, and a Back button beneath it.

Other enhancements in the new Kindle are voice guided text-to-speech menus and a new "experimental" Webkit-based browser. The PDF reader has also been improved with a new dictionary lookup, notes and highlights and password-protection features.

The new Kindle, Amazon said, will come in both 3G+Wi-Fi and Wi-Fi only versions. While 3G+Wi-Fi version will cost the same as Kindle 2 i.e. $189 (£149 in the UK), the Wi-Fi only version will cost $139 (£109 in the UK).

The devices will be available in graphite and white color choices from August 27.

The cheap price of the new Kindle, Amazon CEO Jeff Bezos said, will want people to "buy multiple Kindles for the household."

"We will try to make the best reading device possible, so when you really want to read for two hours, you'll choose a Kindle," Bezos said.

Bezos is so happy with the launch of the new Kindle, he even predicts that "there will be a tenth-generation and a twentieth-generation Kindle."

"We're well-situated to be experts in purpose-built reading devices," he said.

In fact, Amazon is quite confident that the new Kindle will perhaps do even better than Apple Inc.'s tablet computer, the iPad.

According to Amazon vice president (Kindle) Steve Kessel, the company's e-reader has done quite well in the past despite the launch of the iPad.

When the iPad was launched, it threatened to become a 'Kindle killer.'

There were several reasons why.

 One  Besides offering a range of other uses, including music, video and games, the iPad was presented as a platform for the distribution of electronic books, newspapers and magazines.

 Two  The iPad has a built-in iTunes software that will allow users to purchase and download music, movies, apps and more from Apple's iTunes Store.

 Three  The iPad has a full colour display unlike the boring, monochrome display used by the Kindle.

 Four  The iPad has a multitouch display, allowing people to type directly on to the screen, as well as manipulate pictures and control the action in games with their fingers. You can't do that with the Kindle.

 Five  The iPad looks sleek and smart with minimalistic buttons, unlike the Kindle, which looks boring and comes with plasticky button-based interface.

 Six  The iPad is an Apple product and to date, most if not all Apple products have done extremely well.

Apple has sold over 3.2 million units of the "magical device" (as Apple CEO Steve Jobs calls it) to date and the iPad has contributed $2.17 billion to Apple's total revenue in the most recent quarter.

Sales figures are further expected to jump after Apple said it has begun selling the device in nine more countries, apart from the ten countries it is already available, including Germany, Japan, the UK and the US.

No wonder, e-reader makers are watching the iPad warily. But can the iPad kill the Kindle?

Click   Amazon third generation Kindle versus Apple iPad (2)   to find out.