While the company is still only selling simple Kindle e-readers, Amazon has quietly built all the tools it needs to compete against Apple and the other tablet makers with its own Android-based tablets.
Amazon just launched its Android app store today. It could easily end up better than Google's built-in Android Market. Why? Because Amazon cares about building a better storefront than Google. And because Amazon has better e-commerce tools and vision than just about anyone.
Amazon's music store and video streaming service are as close to Apple's iTunes as it gets. That's one of the big problems with the Motorola Xoom, for example -- nice, big screen, but no legit source of movies to stream. Amazon tablets would have an answer. Amazon Prime members can stream unlimited movies and TV episodes from a small (but inevitably growing) library of content. That sounds like a great bonus feature for Amazon tablets.
Would Amazon be able to make a play in the tablet space? Their new Amazon Appstore is a curious move for the company unless they're indeed planning a tablet. Amazon is the only competitor to Apple that would be able to compete with movies, music, and apps all at the same time. Google has proven unreliable when it comes to offering similar media. Their own App Store is a muddled mess of spam or apps that seem to rip each other off. Some with exactly the same icons.
The Kindle has been slowly dropping in price ever since it's been released, and some have speculated that in you follow the pattern, it will become free this November. My guess is that the current form Kindle will become free when signing up for an Amazon Prime account. Then, Amazon will reveal their Android tablet, specially customized with their Appstore built-in. You'd be able to seamlessly buy Kindle books via the tablet, and also peruse their Appstore without having to go through the convoluted process that you need to when installing on an Android phone now. Also, you can't even install the Amazon Appstore on an AT&T Android phone.
The Xoom has been released but doesn't look like it can complete. An Amazon tablet could very well be the answer.