The Amazon Kindle launched the e-book market as we know it this week with the Tuesday introduction of a $139 Wi-Fi version of the device. The release shows how the company plans to continue to lead in the segment: focus on reading.

I got some hands-on time with the newest Kindle, which ships August 27, and found a device that was very similar to previous versions, but better in several important ways.

The first thing you notice about the new Kindle is the size. The device is 21 percent smaller than the previous version, making it much easier to slip into a coat pocket. You might think the screen is smaller, but it is the same six-inch screen as the older version. It is only the border that is smaller.

The new device feels solid in the hand and the smaller size makes it easier to manage one-handed. At 8.7 ounces it is 15 percent lighter than the previous model, and although it isn't any thinner, it is still about one-third of an inch. That is probably a good thing since the thickness is needed to protect that screen.

And the screen deserves some protection. The number one complaint with E Ink displays is that they are too grey. It is a function of the technology; all e-book readers have grey screens. Still, the new Kindle has managed to make a screen that is significantly less grey. In fact, the company claims it has upped the contrast by 50 percent. Indeed, putting it side-by-side next to an older Kindle makes the extra contrast immediately apparent. Don't compare it to a bright iPad, but it looks like the brightest E Ink display I have ever seen.

The Kindle I played with was running version 3.0 of the Kindle software, although it was hard to say what the benefit of this was. I expect that the improved font handling and faster page turns come into play here. The company developed two new, proprietary text handling technologies. Waveform controls how the final grey level is set for images and text. Font hinting is designed to optimize font display when pixels are limited, as is the case with E Ink displays. I need more time to see just how effective these technologies are, but the page turns do seems faster. The software update leads me to wonder if current Kindle owners will get these same benefits when they upgrade.

I spent a little time trying out the Wi-Fi features, and found logging into a network pretty straightforward. Downloading books is quicker and browsing on the still-experimental, but slightly updated Web browser is, obviously, faster when you're on Wi-Fi. Times like these are when that Kindle physical keyboard comes in pretty handy, it makes typing in WEP keys a lot easier. Wi-Fi has been one of the key advantages to the updated Barnes & Noble Nook. Although the Kindle will still sell for $189, the 3G-less, Wi-Fi-only Kindle will be priced at $139.

Speaking of the keyboard, it has pretty much the same layout, but I found the keys to be slightly more raised. In previous versions, the keys are almost recessed, so this is a big improvement.

The Kindle now comes in a grey, graphite color, although the traditional white will still be available. It ships August 27. We expect a Kindle in PC Labs soon for testing, so stay tuned for our full review.