The rumored tablet device, manufactured by Taiwan-based notebook maker Quanta Computer, could allow Amazon to compete more directly with Apple and Barnes & Noble.
Amazon may be about to enter the tablet market, a place where few companies other than Apple have managed to gain traction.
The e-commerce giant, according to Taiwan's Digitimes, has placed a substantial order with Taiwan-based notebook maker Quanta Computer for tablet devices that use display technology from another Taiwan-based company, E Ink Holdings.
Digitimes says sources at companies providing components to Quanta revealed that Quanta is expected to start shipping as soon as the second half of 2011, with unit volume estimated at 700,000 to 800,000 during peak season.
Quanta already manufactures tablets for RIM and is expected to produce them for Sony and possibly Lenovo. Digitimes suggests Amazon wants a tablet because the popularity of its Kindle e-reader is confined to North America and Europe.
Amazon's tablet will almost certainly rely on Google's open source Android operating system: In March, Amazon opened its own Android app store and launched a service called CloudDrive, which offers online file storage.
By offering an Android tablet, Amazon will be able to encourage purchases in its app store and usage of CloudDrive. A full-fledged Android tablet would also compete more effectively with Apple's iPad and with Barnes & Noble's Nook Color. Barnes Noble just recently upgraded its Nook Color to Android 2.2 and opened its own Android app store.
Amazon did not respond to a request for comment.
Amazon had $1.1 billion in capital expenditures in the last 12 months and during last quarter hired some 4,200 people. The company expects to open nine new fulfillment centers this year and is continuing to build out its IT infrastructure for itself and for clients using Amazon Web Services.
In March, Gartner predicted that worldwide spending on media tablets this year will reach $29.4 billion, up from $9.6 billion last year. The research firm foresees further tablet spending rising at a rate of 52% through 2015.
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