Is Amazon preparing to launch an Android-powered Kindle tablet?

Is Amazon preparing to launch an Android tablet? Peter Rojas of gdgt thinks so, and the time does seem right for a refresh to the company's Kindle e-reader; the last time the product got a major upgrade was two years ago. And, as Rojas points out, there's a wealth of circumstantial evidence that points toward Amazon readying a tablet.

Apple has thoroughly dominated the tablet market since the iPad first went on sale about a year ago. The company sold more than 14 million iPads last year, and analysts project that Apple will move as many as 60 million iPad 2s in 2011 (though first-quarter sales were down). Although there was buzz that the Motorola Xoom, the Samsung Galaxy Tab, or the BlackBerry PlayBook might present some competition for Apple's wildly popular tablet, no company has yet been able to produce a tablet worthy of taking on the mighty iPad. Amazon might be the most likely candidate.

Setting the Stage
Looking at moves Amazon has made over the last few months, the company has laid all the foundations for an ecosystem for a tablet device—all it needs now is the hardware (which Rojas says will most likely be made by Samsung). Most recently, Amazon debuted an ad-subsidized Kindle, priced at $114, or $25 below the usual $139 price tag. Readers see "Special Offers" or advertisements featured on screen savers and along the bottom of the Kindle's home screen. This offer only applies to new Kindle users. At this time, people that already own a Kindle aren't able to opt in, but Amazon says it hasn't ruled out the option.

However, Amazon might not have launched ads on the Kindle to entice new users. Frankly, Amazon doesn't need to lure people further; the Kindle is Amazon's best-selling device of all time. Rather, this could be the first part of an advertising platform. If Amazon subsidized a tablet with advertising, it might be able to sell the device at a cheaper, more competitive price. The iPad 2 ranges in price from $499 to $829. If Amazon could sell a comparable tablet at a lower price, it might be able to snatch potential buyers from Apple.

Apps and More
Another prong of the argument is that Amazon recently opened its own Android Appstore last month. It has nearly 30 different categories of apps that can be tested out on the PC. Among some of the features of the stores are one-click purchasing, targeted recommendations, discounted apps in the deals section, and one free paid app per day. Amazon also offers a native mobile app for the store.

Last month, Amazon also unveiled a cloud-based music service that provides users with up to 5GB of free, online music storage. The service includes Amazon Cloud Drive, Amazon Cloud Player for Web, and Amazon Cloud Player for Android. These features allow users to upload their music library to the cloud and play their favorite songs on Macs on PCs— but also on Android-based phones and tablets (and, notably, not on iOS devices).

Amazon Prime is another piece of the puzzle. Members pay $79 a year to get free unlimited two-day shipping, and Amazon recently added streaming video to this service through Amazon Instant Video. The selection of content might be limited for now, but it points to another fact: Amazon has a wealth of content available on its site, a key part of a tablet ecosystem and something other players in the tablet space lack. Similar to Kindle software that allows users to buy a book with just one click within the app, Amazon's tablet could allow users to do this with a wider selection of books, movies, and music.

Other Clues
Barnes & Noble has tried its hand at an LCD tablet with the Nook Color, and by most measures it's been successful so far. Although the company has been tight-lipped about the numbers, DigiTimes estimates B&N has shipped three million of the $250 Android-powered devices since it launched in November. It's priced at a lower point than the iPad because, as Rojas pointed out, Barnes & Noble counts on Nook owners to buy content directly from Barnes & Noble. Amazon is in the position to take this even further with the giant ecosystem it appears to be building. Amazon appears to be waiting in the wings to unveil a game-changer: a cheap tablet rich with content, made attractive by the convenience of native apps and services that can compete with the iPad.

When the iPad first debuted last April, there was chatter that it would be a Kindle killer. But quite the opposite proved to be true. In fact, according to one study, 40 percent of iPad owners also have a Kindle. This has proven to Amazon that if it does produce its own tablet, it won't necessarily mean the end—or the transformation—of the Kindle line.

It's obvious from Amazon's most recent moves that the company is moving toward Android, and everything else the company has done lately matches perfectly with a coming launch of a tablet device. It has the music player, the content storage system, the e-reader software, the app store, and a plan for aggressive pricing. The tablet's place is ready; now all Amazon needs is an actual product.

This article, written by Leslie Horn, originally appeared on PCMag.com and is republished on Gear Live with the permission of Ziff Davis, Inc.