Amazon has been offering its products cheaper than others as the company is wants to get the devices into as many hands as possible, then sell higher-margin digital content, such as e-books, video, games, apps and music. Last year, Amazon surprised rivals by pricing its first tablet at $199, well below Apple's iPad and less than most other tablets at the time.
Since then, Google started selling its 7-inch Nexus 7 tablet for $199 with better specifications, while Barnes & Noble cut the price of one of its Nook tablets to $179. Microsoft's upcoming Surface tablet may also be priced at $199.
The company has already cut the price of some of its e-readers. The cheapest Kindle costs $79 with ads, while the same version without ads is $109, according to Amazon's website.
Amazon's mobile devices have been also popular among app developers, who are are keen on the Kindle platform because Amazon customers are used to paying for content and the company's one-click payment system makes purchasing easy.