Screenshot by Lance Whitney/CNET

Amazon is serving Netflix some mobile competition with its new Instant Video iPad app.

Free for iPad users, the Amazon Instant Video app offers both Amazon Prime and non-Prime users the ability to purchase or rent any of the more than 120,000 videos available in the retailer's online video store.

Users can then stream the content to view it online or download it to catch it offline. Amazon Prime subscribers ($79 a year) get the better end of the deal. Prime members can stream thousands of movies and TV shows at no extra cost. Non-members must pay the rental or purchase fee for each individual piece of content.

You can add your favorite movies to a Watchlist, similar to the Netflix queue. Amazon displays a list of featured movies and TV shows, both for adults and kids. Tapping into Amazon's Whispersync feature, you can rev up a movie or TV episode on the iPad and then continue watching where you left off on a PC, Mac, Kindle Fire, or other compatible device.

The layout borrows its look and feel directly from Netflix, offering several rows with thumbnail images of each video. Tapping on a movie displays its length, customer rating, and a brief synopsis. Tapping on a TV series displays the same information plus links to each season and show so you can choose a specific episode to watch.

Sounds good so far, but the app itself is limited in one key way.

You can't actually rent or purchase videos from the app. To do that, you still have to fire up your computer or at least your mobile browser and navigate to Amazon's Instant Video Store. There you can choose the movies and TV shows you want to rent or buy and pay for them online. Once you return to the iPad app, your video is waiting for you to stream or download.

As such, there's also no way to search for items on the app.

You can see which videos are in your Watchlist and of course play the ones you've already bought. You can also see the content featured by Amazon. But to find a specific title, you have to return to the online store. The ability to watch content on your tablet is certainly a bonus. But having to jump between the app and the store to get the content is a clumsy process.

An Amazon representative told CNET that "new videos can be rented or purchased from Amazon Instant Video on the Web, including Safari on the iPad." So users need not necessarily scurry back to their PCs to pay for content. But it still would be handy for this ability to be built right into the app.

Amazon Prime members can certainly take advantage of the free content available. They're the major beneficiaries of this new app. The company is undoubtedly hoping to lure in more users to its Prime service. And that strategy could pay off.

The immediate access to 120,000 videos may convince more people to sign up for Prime, even Netflix users like me who can't always find our favorite movies or TV shows available for streaming.

Update, 10:30 a.m. PT: Adds comment from Amazon.