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The next version of Amazon’s Kindle Fire tablet will come with a sharper and more vibrant display, in addition to a built-in camera and thinner and lighter hardware.

That’s the word from AllThingsD’s John Paczkowski, based on conversations with sources who have been briefed on the Seattle company’s plans. He reports that app developers have been told by Amazon to expect a 1280 x 800 resolution screen, up from the 1024 x 600 display in the current Kindle Fire.

The existing Kindle Fire (pictured here) sells for $199 and doesn’t come with a built-camera.

AllThingsD doesn’t mention any plans for a larger Kindle Fire. Tech blog BGR reported previously that the company would be coming out with a larger version, with a 10-inch screen closer in size to the iPad, in addition to a new version of the 7-inch tablet.

Competition in the tablet market is heating up, with Google and Microsoft both jumping in with their own devices to challenge the Kindle Fire and the iPad. Apple is rumored to be coming out with a smaller iPad. Kindle Fire sales have reportedly slumped this year after a strong holiday launch.

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