NEW YORK/SAN FRANCISCO (Reuters) - Amazon.com Inc introduced a larger, souped-up Kindle electronic reader on Wednesday designed for students and newspaper readers, but a $489 price tag could make it too expensive for many consumers.

Amazon.com founder and CEO Jeff Bezos holds the new Kindle DX electronic reader at a news conference where the device was introduced in New York May 6, 2009. The latest version of the device is larger, aimed at newspapers and textbooks and carries a price tag of $489. REUTERS/Eric Thayer

The Kindle DX, which has a 9.7 inch black-and-white display, is designed to be a more friendly vehicle for textbooks and newspapers, which often need a larger space to display their content effectively. The DX has about 2.5 times the surface area of the normal Kindle and costs $130 more.

Despite the popularity and buzz surrounding the Kindle brand, the DX faces challenges, analysts say. It debuts at a time when consumer spending is ebbing due to the recession.

And while it has a less-cluttered layout than the average computer screen and is easier on the eyes than a monitor, the DX provides little of the interactivity that people get on other hand-held devices. It does not offer color or touch-screen.

Super-sizing the Kindle also appears to ignore consumers’ fascination with pocket-size gadgets such as Apple Inc’s iPod and iPhone.

“It seems like you’re fighting the impulse among consumers to go to smaller, more portable ways of acquiring media, such as an iPhone or a netbook,” said Alan Mutter, a technology venture capitalist and former newspaper editor who runs the newspaper business blog Reflections of a Newsosaur.

PILOT PROGRAMS

The new Kindle comes as other companies including Sony Corp experiment with digital readers as ways to get people to use -- and pay for -- traditional media, even as they spend more time online and less time on the printed page.

Amazon CEO Jeff Bezos said The New York Times, The Washington Post and The Boston Globe will start pilot programs with the DX this summer. He said five universities will do pilot programs with the reader acting as an all-in-one textbook.

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The DX also allows people to read personal documents, and is touted as a way for businesspeople and others to avoid having to carry around an assortment of loose papers.

Besides making highly formatted pages easier to read, the DX has more memory, 3.3 gigabytes, which can hold up to 3,500 books versus the normal Kindle’s 1,500.

But at $489, analysts questioned how many economy-conscious consumers would open their wallets for the new gadget, which weighs nearly 19 ounces.

“It is somewhat ironic in that the device is getting more expensive as the source content that is well-suited to it is becoming more mass-market such as newspapers and textbooks,” said Ross Rubin, consumer technology analyst at the NPD Group.

Amazon is quick to tout its Kindle as the future of reading -- and a sales driver for the Seattle-based giant -- but does not disclose its sales and profit breakdown, leading some analysts to view the Kindle as an interesting niche device with minor mainstream appeal.

NO GAME-CHANGER

Amazon is hoping that newspaper publishers find the Kindle DX a better way to show off their daily editions.

The New York Times and The Washington Post will offer the DX at a reduced price to readers where home delivery of those newspapers is not available.

The announcement comes hours after The New York Times concluded a series of marathon talks with The Boston Globe’s biggest union to win millions of dollars in cost concessions that the Times says it needs to keep the paper alive.

Newspapers are already available on the regular Kindle. A subscription to The New York Times costs $13.99 per month, and the Washington Post and Los Angeles Times cost $9.99.

“It’s certainly not a game-changing move for the newspaper business at this point in time,” NPD’s Rubin said. “E-readers are just a piece of the puzzle,” he said.

Textbook publishers Cengage Learning Inc, Pearson Plc and Wiley will offer books through the Kindle store starting this summer, with others to follow.

Trials using the DX beginning this fall will be conducted at Arizona State University, Case Western Reserve University, Princeton University, Reed College and the University of Virginia’s Darden School of Business, the company said.

Amazon did not disclose the price of e-textbooks, but they are likely to be at a discount to physical books.

The hand-held Kindle, updated earlier this year and only available in the United States, allows users to read books, newspapers, magazines and blogs. Like the regular Kindle, DX users will be able to get access to books that can be downloaded through the Kindle store for $9.99 in most cases.

Amazon shares ended 9 cents higher at $81.99 on the Nasdaq.