Amazon wants to start giving away its Kindle electronic reader to thwart the threat posed by Apple's new iPad, according to a report Friday by the influential technology site

The report said that Amazon would start by providing the $259 device to subscribers of Amazon Prime, a $79 per year service that gives customers free two-day shipping on everything they buy from the web retail giant.

The report said that Amazon believes that it can make money on the giveaway because its best customers would buy enough products to make up for the free device over a few years, especially when the company is able to bring production costs down.

Apple announced its iPad tablet computer last last month. The iPad, which is optimised for web browsing, entertainment and electronic book reading, will go on sale in March with prices ranging from $499 to $829.

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