The price has always been the thing to love the most about Amazon’s $199 Kindle Fire. The device itself hasn’t been a showstopper — it wasn’t designed to be — since the tablet was more about getting people Amazon content through a cheap device than wowing them with technical specifications. Essentially, the Fire is an e-reader that also plays videos.

But according to a report from All Things Digital’s John Paczkowski, Amazon is prepping a second-generation tablet that will be thinner, lighter, pack a better camera and, best of all, have a better display.

Paczkowski, citing unnamed “people familiar with Amazon’s plans” said that the developers have been told to make apps for a 1280 x 800 pixel resolution, the same resolution of the upcoming Nexus 7 tablet from Google.

The report said that the tablet is tipped for a release in the second half of the year, with an eye on the later end of the third quarter.

While Amazon saw early success with the Fire when it launched last fall, it’s coming into a more crowded market. Namely, they’re going up against Google.

The Nexus tablet, reviewers have said, will be a serious competitor for the Fire, as they share both a form factor and a killer price point. Add in the persistent rumor of a smaller iPad and the prospect for competition gets even more interesting.

There are, of course, also rumors that Amazon could release a larger Fire tablet, and diversify the Kindle line even further.

Amazon has been widely expected to improve upon the Fire, following the path it set for the Kindle readers. When the company released the first version of the Kindle, the device cost $399 and was knocked for its clunky design. But Amazon continued to update the Kindle until it had a real hit on its hands.

The Fire started out at a much higher level, but could still use a lot of work. Taking out some bulk and improving the display could go a long way if Amazon wants the Fire to be more than a souped-up e-reader.

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