Whenever you see a product receive a much-needed price cut, then there is a good chance that retailers are trying to offload old stock for promotion purposes, or as a way to prepare for a new model. This is just what we feel is happening with the Kindle Fire HD, as the 7-inch model has just been reduced in price by $40.

While this price reduction is not a big one, it is when you consider how cheap the 7-inch Kindle Fire HD is to purchase in the first place from the Amazon storefront. We are told that this is a limited time offer, and so we don’t expect it to be around for long.

Amazon could be trying to sell their Kindle Fire HD at a reduced price because they know they have serious issues because the new Nexus 7 has received a much needed spec bump, and so makes Amazon’s tablet a tougher sell for more serious Android users.

Personally, we believe this is the build up to the Kindle Fire HD 2nd generation release, and it cannot come quick enough because the current version is starting to show serious signs of aging. Amazon surely knows that it will take far more than a price drop to help sales, and so we anticipate the imminent release of the Kindle Fire HD 2.

If we are to believe those rumored Kindle Fire HD 2 specs, then it will allow Amazon to become a more serious player in the tablet market. We expect to see the ever-popular Qualcomm Snapdragon 800 processor of the dual-core variety and a clock speed of 2GHz, 2GB of RAM and an Adreno 330 GPU. More specs details can be found in our recent article.

For those of you who are not worried about having the most up-to-date technology then you should go for these deals. Just remember the current Kindle Fire HD does have its limitations, although we cannot be certain if the second generation model will deliver the kind of performance and user experience as the Nexus 7 2?