It seem that the success story of Kindle Fire tablet inspired Google to develop a sub-$200 Android tablet, which is apparently the best 7-inch tablet available in the market. However, the fame of Nexus 7 might be short-lived as Amazon is looking to strike back with a new wave of Kindle Fire tablets.

According to a report by CNET, Amazon is working on as many as four Kindle Fire 2 variants with each model varying from the other. The entry-level model has the old display resolution of 1024 X 600 pixels on 7-inch display. The mid-two models pack an updated resolution of 1280 X 800 pixels, which is apparently same as the Nexus tablet. However, the high-end model takes the competition a step further with 1920 X 1200 pixels resolution on 8.9-inch display.

The report also notes that one of the 7-inch variant of Amazon's second generation Fire tablets will come with cellular connectivity - a feature that is missing from the Nexus tablet. Kindle Fire 2 will also pack a camera for video chatting. However, the entry-level model will not have this feature.

Amazon developing an improved version of the Kindle Fire tablet for 2012 release isn't surprising news. Tech enthusiasts have been speculating the tablet for months. It is also believed that Amazon will launch a 10-inch variant of Kindle Fire tablet this year.

Other rumors suggest that tablet will come with a new design with thinner chassis. Amazon is also expected to bump up the dual-core processor found in the original Kindle Fire to quad-core processor in the next version of the Fire tablet.

As far as the release date is concerned, folks at CNET note that the Wi-Fi only versions of Kindle Fire tablet will release in August, while the 4G LTE variant is due to debut in September. The 8.9-inch version, which isn't much likely to debut, is releasing in Q4, according to the tech site.

Tablet market leader Apple is also anticipated to make a foray in the 7-inch tablet market this fall. The iPad Mini, or whatever the name will be, is likely to cost around $300. In this respect, Amazon needs to launch its new tablet before Apple does that.