Amazon is building its own App Store, but for what device? We think we have a good idea -- a secret Android Tablet.

Yesterday, in my piece about the lack of successful Android-based competitors to the iPod Touch, I touched a little bit upon what companies actually had the potential to launch an actual iPod Touch competitor that might actually resonate with consumers.

One of the ones I mentioned was Amazon, which as we all know is kicking ass and taking names in the ebook and e-reader market.

Amazon has all the value-added services that would be necessary in order to launch a mass-market Android device -- be it a media player like the iPod Touch, a 7-inch slate like the Samsung Galaxy Tab, or even a full-sized 10-inch tablet like the iPad.

It has a music distribution service, Amazon MP3 that competes well with Apple's iTunes, and has a Video-On-Demand service, Amazon Video, which could potentially provide content downloads to compete with iTunes video rentals on the iPad and also with any Apple TV service that might launch on the iPad in the future. And naturally, it also has the entire Kindle Store with over 1 Million ebooks from which to choose from which it already trounces Apple's iBooks with, even when used on their own iOS platform.

Kindle and Amazon MP3 have already been ported to Android, so the only missing app here would be a media player program for downloading and streaming Amazon's DRMed video.

So what's the real missing part of the equation? Well, an App Store, for starters. But we already know that Amazon is building an App Store, as per the "Welcome Packet" that was sent out to seed developers in early October. And while an Amazon App Store could theoretically support any future platform(s) that Amazon decides to build consumer electronics products on, it mentions Android specifically by name in the literature that has leaked.

One of the biggest problems that most, if not virtually all of recently announced Android Tablets and Android Media Players have is lack of Android Market integration. No matter how good the hardware itself is, without an App ecosystem to accompany it, the value of any Android device is largely diminished.

Most of these low-cost 7" tablets that have been announced in the Sub-$400.00 category (such as Creative's Ziio and the Archos 70) are Wi-Fi only devices, and due to restrictions that Google currently places on the device manufacturers, we're not likely to see many of these inexpensive tablets with Android Market support for a while.

The Samsung Galaxy Tab, which is to launch shortly in the US in retail as well as by various wireless carriers will have Android Market support, but the product is much more expensive ($500-$600 for Wi-Fi only and contract-free 3G-capable devices) than the other aforementioned 7" tablets.

As such, some analysts, such as our own Editor-in-Chief Larry Dignan, are predicting that the Samsung is unlikely to resonate with customers as a viable alternative when faced with a compelling product such as the iPad.

The only reason why Amazon would want to develop its own App Store would be to offer the service to low-cost device manufacturers in order to compete with the Android Market, or to provide an app ecosystem for a device of its very own.

Page 2: [The Real Reason Amazon is Building an App Store] »

I'm taking a wild guess here that it's the latter, rather than the former, although licensing to 3rd-parties is not out of the question. However based on my examination of the initial materials which have leaked, Amazon's App Store is most likely to have a "curated" model similar to Apple's App Store, in order to maintain quality control as well as deny potential competitors access to it. This is in stark contrast to the Android Market, which is effectively a Wild West with limited acceptance criteria.

So what would this Amazon Android Tablet look like? In order to be competitive with the iPad and distinguish itself from the cheap 7" tablets that we're seeing arrive for the 2010 holiday season, I think that the company is likely to gun directly for iPad territory with a 10-inch tablet with a minimum of 1024x768 resolution on a capacitive touchscreen.

I also think that it's entirely possible that the device may even sport a dual-mode transflective LCD display, such as those being produced by Pixel Qi, which no Android device to date is currently using, and would distinguish its color e-Reading capabilities from both the current-generation iPad and the NookColor, which cannot be used to read effectively in direct sunlight outdoors.

What would one of these things cost? Amazon is a smart company and is well aware of the risks of launching a new product and would want to guarantee its success. And unlike its virtual monopoly of the ebook and ereader space in which it enjoys over 70 percent market share, it would be entering an existing market with an established leader in the space already.

So any Amazon Tablet device would have to present a great deal of value for the money, would need to have a comparable set of features to whatever base-model iPad that was selling at the time of launch and be considerably less expensive. So what do I think something like that would likely sell for? $349.00 or less, which would almost certainly be very close to margin and manufacturing/distribution costs.

This is something that the other Android Tablet OEMs cannot do because they would lose money. But as we've observed with the Kindle e-reader, the company is more than willing to break even on the device sales if it has a built-in market with the Kindle books, the Amazon MP3s and the Videos.

And if their existing business practices with Kindle Store are of any indication, Amazon is likely to take a substantial cut of the profits from Apps sold on their new App Store, which would offset any loss of profit on the Tablets.

When this Amazon Tablet is likely to appear is anyone's guess. It's unlikely to be this coming holiday season, and the company may be biding its time until a more polished version of the Android OS for tablets is ready, such as "Gingerbread" that is due for a late 2010/early 2011 launch or maybe even "Honeycomb" which is due in the middle of next year.

But one thing is for certain -- an Amazon Android device is coming. It's simply a question of when.

Would an Amazon-produced Android Tablet interest you? Talk Back and Let Me Know.