Citing certain unnamed but seemingly reliable sources, a recent report has Amazon(NASDAQ:AMZN) getting ready for the release of their first Tablet PC as early as the end of this year. There have been rumors and speculation flying around for months now about a possible tablet successor to the bestselling Kindle 3, but this is the first solid information we’ve had that opens the door to speculation about release dates.

Apparently Quanta Computer, a Taiwan based company, has received orders from Amazon for a new tablet PC expected to be in demand on the order of 700,0000 to 800,000 units per month during peak demand. The same report notes that Quanta is expecting to be shipping as soon as the second half of 2011. Definitely a good sign for people impatient to see what Amazon has up their sleeve. The expectation at the moment is that the current supplier of Kindle screen technology, E Ink Holdings, will be tapped to provide components for the new device. When contacted, E Ink refused to make any comment either way. This would make it the first color E Ink tablet PC, to the best of my knowledge and assuming Barnes & Noble(NYSE:BKS) doesn’t beat them to the punch, which would be quite the accomplishment. It is also a safe bet that the new Kindle Tablet, whatever it ends up being called, will be running Android Honeycomb. They’ve set themselves up an extensive app store already that should get the launch off impressively right off the bat.

While at the moment Apple holds the vast majority of the tablet PC market, there’s at least some reason for them to feel threatened at this point. An affordable but highly functional tablet that is linked to one of the biggest distributors of digital media there is would be exactly what it takes to cut into their profits. For all we know, this could be the driving force behind the seemingly ridiculous lawsuit Apple filed over Amazon’s use of the title “app store”.

I would not expect the Kindle Tablet to stand out based on its hardware. Amazon is positioned in the best possible spot to take advantage of the profit potential in content distribution. This means keeping costs down and making sure that the device gets into the hands of as many people as possible, explaining the 800,000 unit per month estimation. Chances are good that the new tablet will be just powerful enough to handle video streaming in order to pull in the Netflix and Hulu users, but nothing more extensive than that. The Kindle vs iPad competition won’t be based on the superiority of the technology so much as who makes the better sales pitch on the software.

Amazon won’t be the first company to try to take a chunk of the tablet market away from Apple. There are tablets aplenty to choose from these days, many of which on paper are approximately as good as or better than the iPad. Nobody’s likely to come out ahead without a content distribution system like Amazon’s, however. This may be the turning point.