Siegler believes it runs on a single-core chip and only has 6 GB of internal storage. The initial version of the device will be WiFi-only and has a micro-USB port and speakers, but no camera.

The really big news is the price.

It will compete with the similarly priced Barnes & Noble Nook Color, although Amazon will be sweetening the deal by giving buyers a free subscription to Amazon Prime. The service is $79 a year and gives users free unlimited two-day shipping, no minimum purchases for free shipping and access to Amazon’s Instant Video service.

Amazon plans to release a more expensive 10-inch tablet in early 2012 while continuing to sell its existing e-ink-based Kindles alongside the new versions.