Amazon.com Inc introduced on Wednesday a larger, souped-up version of its Kindle electronic reader designed for students, academics and newspaper readers, but its $489 price tag could cap sales.

The new Kindle DX has a 9.7 inch display that rotates -- about 2.5 times the surface area of the normal Kindle -- making it easier to read highly formatted pages.

It has more memory, 3.3 gigabytes, which can hold up to 3,500 books compared with the normal Kindle's 1,500 and software to make it easier to navigate large documents such as PDFs.

But at $130 above the $359 cost of the original Kindle, launched in 2007, 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 for the NPD Group.

The launch of the Kindle DX comes as a host of companies experiment with electronic readers, including larger versions geared toward newspapers that are expected to hit the market by the end of this year and into the next.

Amazon Chief Executive Jeff Bezos attended a New York news conference to announce the launch, together with Arthur Sulzberger Jr., publisher of The New York Times.

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

Textbook publishers Cengage Learning Inc, Pearson Plc and Wiley will offer books through the Kindle store starting this summer, Amazon said.

Five universities will launch trials using the DX, beginning this fall, the company said.

The hand-held Kindle, which was updated earlier this year, allows users to read books, newspapers, magazines and blogs. It is only available in the United States.

Like the regular Kindle, DX users will be able to access to books that can be downloaded through the Kindle store for $9.99 in most cases. Amazon did not disclose how much textbooks will cost, nor any revenue-sharing details with the newspapers.

NO QUICK FIX?

While the larger version means students will not have to lug around heavy textbooks, they might balk at the price, especially when they can already use laptops to access electronic textbooks over the Internet, or download them onto the regular Kindle or other e-readers.

Moreover, supersizing the Kindle appears at first glance to ignore the consumer fascination with hand-held gadgets such as Apple Inc's iPod and iPhone, some say. The device also may not prove to be a quick fix for struggling newspapers devastated by crumbling advertising revenue and declining readership.

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.

But others see academia as the best fit for the new Kindle. They say electronic textbooks downloaded onto the device could be a major revenue driver in the future.

Arizona State University, Case Western Reserve University, Princeton University, Reed College and the University of Virginia's Darden School of business are involved in the trial program for students.

We look forward to seeing how the device affects the participation of both students and faculty in the educational experience, said Barbara Snyder, president of Case Western Reserve University.

A host of companies around the world have been working on reading devices geared to newspapers, including News Corp, parent of The Wall Street Journal and other papers, and Hearst Corp, whose papers include the San Francisco Chronicle and the Houston Chronicle.

Amazon shares were down about 1 percent at $81.15 in afternoon trading on the Nasdaq.

(Writing by Alexandria Sage; Editing by Derek Caney and Andre Grenon)

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