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Amazon Tablet Rumors Heat Up

Usually only Apple can generate this much prerelease excitement for a product that may or may not happen. But online retailer has struck virtual gold in the rumor circuit this summer thanks to persistent leaks about its plans to compete with Apple's iPad.

And Amazon has "plans," not "a plan." The company plans to ship three new tablets in the coming months, according to these rumors, creating a family of devices that update its Kindle line as well as enter the traditional tablet market that's currently dominated by the iPad.

Amazon's tablets are a big deal precisely because the retailer is perhaps the only company aside from Microsoft that can mount an effective rival to the iPad. And with Microsoft delaying its entry until the release of Windows 8 in 2012, Amazon has a nice opening now, and the 2011 holiday season to itself.

So what is Amazon prepping for release this year? According to multiple sources quoted by such august rumor mongers as The New York Times and The Wall Street Journal—both of which interrupted their daily flow of pseudo-news stories about new iPad apps to report on these developments—Amazon has three devices in the pipeline.

The first is an e-ink-based replacement for the current Kindle eReader, which is a thin, light, low-cost, black-and-white device that will likely start under $100. This device could actually come in multiple versions, as does the current Kindle; for example, Amazon currently sells large- and small-format Kindle devices, and some are ad-supported.

The second is a new color Kindle that would rival Barnes & Noble's Nook Color. Like the Nook, Amazon's color Kindle will run on the Google Android mobile OS and feature a touch screen. And because it's Android-based, it should be able to run mobile apps.

The third device is perhaps the most intriguing because it will directly compete with Apple's iPad and be similar to that device in size, weight, and capabilities. This full-featured Amazon tablet will cost less than the iPad and run Android apps, and will be backed by Amazon's capacious ecosystem, including support for digital music (Amazon MP3); rented, purchased, and streamed TV shows and movies (Amazon Prime); eBooks (Kindle); audiobooks (Audible); and more.

This last bit is key. While numerous wannabe iPad competitors have finally arrived in 2011—the HP TouchPad, the Research in Motion (RIM) PlayBook, and many, many Android variants—all have suffered in one key area: the lack of ecosystem support. This is where Amazon's years-long experience with cloud-based content will put its own iPad competitor(s) over the top.

And the stakes are high. Although iPads and other tablets haven't exactly "dented" PC sales yet, contrary to reports, both IDC and Gartner feel they're poised to. And electronic retailers such as Best Buy are working to help that trend by shoving off their PC displays to back aisles and opening up new tablet displays—today, largely empty—that they intend to fill in time for the holiday season. If Amazon can establish its own brand of Android tablets as the de facto iPad alternative, it could seize control of a market that is much bigger than the eBook reader market it currently dominates with the Kindle.

Indeed, some believe that tablet devices will someday outsell PCs and become one of several mainstream computing devices alongside traditional desktop and portable computers and smartphones. Currently, PCs outsell tablets by over 10 to 1, however.

Stay tuned. This could be an interesting holiday season.

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