Amazon ( AMZN) is aiming to take digital reading into the mainstream as it rolls out a new generation of its Kindle e-reader ahead of the crucial holiday shopping season.

A sleeker and cheaper Kindle comes as Amazon works to maintain its tenuous lead in the fast-growing market for e-books and e-readers.

The debut of the refreshed Kindle coincides with the launch of Amazon's local U.K. store at the end of August. The U.K. store will offer 400,000 titles, or what the company claims is the widest selection of books in the U.K. market.

The new base model Kindle is smaller, lighter and faster than its predecessor, with more storage and battery life.

However, it still has a relatively small, grayscale screen that is not touch-sensitive. It will sell for $189 in the U.S. with free 3G downloading, while a Wi-Fi-only version will cost $139.

Jeff Bezos, Amazon CEO, touted the launch with customary brio. "Kindle is the best-selling product on Amazon for two years running," he said. "At this price point, many people are going to buy multiple units for the home and family."

But Amazon's push comes amid an increasingly crowded e-book market and growing tensions between the e-commerce behemoth and the publishing world.

Book publishers are wary that cheap e-book prices will eat into their margins. These fears have been exacerbated in recent days as Andrew Wylie, the literary agent, struck an exclusive agreement to sell electronic versions of classics such as Vladimir Nabokov's Lolita and Salman Rushdie's Midnight's Children through Amazon.

The refresh of the Kindle comes on the heels of price cuts. In June, Barnes & Noble ( BKS) lowered the price of its Nook e-reader below $200, prompting reductions by Amazon and Sony, and bringing e-readers within reach of mainstream customers.

The price war was sparked in part by the success of Apple's ( AAPL) higher-priced iPad, which has highlighted the gulf between multifunction tablet devices and standalone e-readers such as the Kindle.

Amazon does not release unit sales figures for Kindles or e-books. However, it says "millions" of Kindles are in use.

Last week it said five authors had each sold 500,000 e-books through the Kindle platform, and that Stieg Larsson, the deceased writer of the Millennium trilogy, had sold a million.

But Amazon faces mounting pressure from competitors including Apple, Borders ( BGP) and Google ( GOOG), which plans to launch a digital bookstore this year.

Goldman Sachs analysts predict Amazon's share of the market could fall to 28% 2015 from 50% this year.

Borders, one of the largest sellers of books and entertainment in the U.S., has launched an e-books business. Mike Edwards, Borders chief executive, told the FT in early July that a price war at this early stage of the business, when only about 3% of U.S. readers own dedicated e-readers, was not necessarily a bad trend.
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