Kindle Fire 10-inch screenAmazon’s upcoming Kindle Fire is aligned to directly do battle the Nexus 7, not Apple’s iPad. Not unexpected, although multiple rumors previously suggested the retail giant had plans to scale at least one model up to match the size of other 10-inch tablets on the market. But according to CNET, that’s just not the case.

When Amazon takes the stage on Sept. 6, it will unveil two new 7-inch Kindle Fires. Reading into that, we can take that to mean Amazon probably feels like it doesn’t stand a chance in that bigger tablet category. Smaller tablets its where its at. Even Apple might admit that going forward.

Apparently, the lower-end Fire will sport slightly upgraded specs over last year’s model, with a much improved UI and even cheaper price point. The cheaper price, however, may come at the cost of ads, which the WSJ says would pop up every time a user wake the Fire from sleep. That’s Amazon’s first jab to the face of Google’s Nexus 7. Its second, more high-end model will introduce a more substantial jump to justify the year gap of Fire silence.

So what can we expect? Hardware improvements, including a faster processor, camera, PHYSICAL VOLUME CONTROLS, HDMI port, and larger storage options. Unfortunately, it won’t one-up the Nexus 7 with support for expandable storage. Too bad. Not exactly the knockout punch we would have liked, but perhaps the device will translate better in person than in rumors.

This holiday season is going to be an all out mini tablet war. The Nexus 7 did its shock and awe over the summer, and now it’s Amazon’s turn to respond. Offering up two separate 7-inch models might be the ticket to attracting folks away from Google’s golden child. Or: The Nexus 7’s muscle could prove to be too much for the Fire(s) to handle. We’ll get a better idea of the situation next week.

[via CNET, WSJ]