Amazon (NASDAQ: AMZN) is hoping to remain competitive in the e-reader sector since the advent of the iPad. The company has just announced their upgrade plans for the ebook reader Kindle 2.5. Kindle user can now interact with friends online via Twitter and Facebook which until now was not possible unlike with the Apple iPad.

Users will be able to Tweet passages from their favorite ebooks or let the Facebook community know what they are reading. Users also have the ability to read and rate the most popular passages being posted on social networking sites. Later this month, Amazon is expected to provide a full release to all Kindle users with the updates being sent via automatic wireless connection.

Amazon hopes to cut off the competition, namely Barnes and Noble’s Nook and the Apple iPad by adding the social networking capabilities. The upgrades for the Kindle have already been sent out to a select group of Kindle users. The update also includes two new font sizes, sharper fonts, book collection tool sorting capabilities, and password protection options. The security feature of password protection has curiously not been added until now..

Kindle was first launched in 2007 and has already released major updates for the Standard and DX versions of the Kindle 2.5 firmware. The Kindle is the first mainstream ebook reader but has been under pressure from the iPad which has already sold over a million units around the world in less than 30 days.

Before the announcement of the upgrade, Amazon allowed only for the 3G wireless connection to access the online bookstore. Now that the company has allowed social networking capabilities, there is no way to tell how far Amazon will go when it comes to the Web. However, the Apple iPad does already have a fully functional Web browser so more upgrades are to be expected if Amazon wishes to stay competitive in the e-reader market.