Household name brand recognition? Check. Experience selling digital content? Check. Tons of books, music and video currently being sold and downloaded to mobile devices? Check. App Store? Check. Web store infrastructure that already has your credit card info saved? Check. Robust, trusted user reviews backed by loyal user community? Check. Proven track record selling handheld devices? Check.

Secret sauce that could give them a leg-up on Apple’s iTunes store? Just maybe … Check.

Amazon is well suited to go head-to-head with Apple in the tablet wars. Better suited than anyone else out there, perhaps. Recent reports suggest that Amazon’s been working on a tablet for several months now, having bought multitouch technology company Touchco, posting job openings for Android developers, and in all likelihood tinkering with Android-based hardware in Lab126, the same secret subsidiary hideout where Kindle was conceived. Amazon’s Android App Store opened this week, and while it’s been gathering positive reviews for usability and overall structure and design, it’s also far too difficult to install to have much of a chance at mass adoption. This, of course, has led pundits to throw fuel on the Amazon Tablet Rumor fire, speculating that the current store is a public beta from which Amazon can gather feedback from hardcore users while readying the app store that will ship pre-installed on said mythical tablet.

Angry Birds developer Rovio threw a potential wrench into that scenario today in announcing that AT&T plans to offer Amazon’s App Store loaded up on some forthcoming Android devices. This could indicate a strategy that’s focused on getting the store onto other folks’ hardware, and not on Amazon’s own tablet. But I don’t think the two strategies have to be mutually exclusive; Amazon knows volume means revenue as well as anyone, so why wouldn’t they want folks buying Android apps from them no matter who’s hardware those apps are being installed on?

Still, the stage is well set for Amazon to morph Kindle into a full-on tablet. Barnes and Noble has done well turning nook into nook Color, an Android 2.x based device that’s sort of a mini tablet (or maxi e-reader), adding a custom UI, Web browser, and a multitouch color LCD display to their successful e-reader platform. B&N says an app store is coming soon to nook Color, and that an email app will be part of its offerings, which will make the $250 device an even more attractive offering to folks who like its tidy form factor, solid offering of books and periodicals, and the occasional free cup of coffee or pastry offered up as nook owner-only enticements to come into a brick-n-mortar B&N outlet.

Amazon could do nook Color one – make that two, at least – better with their own Android-based tablet. Think about something like this:

  • Android based with a custom OS that’s geared more towards the average Amazon customer than the average Android smartphone owner.
  • Priced around $200-300 to severely undercut iPad and compete with nook Color
  • Smaller screen and less power than iPad, but plenty for the average user (doesn’t need to be a gaming powerhouse)
  • Wi-Fi only (3G/4G is possible but could complicate matters for no good reason)
  • Ships with your Amazon account info pre-loaded so you’re ready to browse, read, shop and download right out of the box. No accounts to sync, no credit card info to enter.
  • Killer Amazon shopping experience
  • One or more form factors that continue Kindle’s basic design: Simple, lightweight, nice to read on. Upgraded with a multitouch color LCD display.
  • Supports Amazon’s digital content offerings including App Store, Music, Kindle books/periodicals, and …
  • Supports Amazon Instant Video streaming, both pay-per-view and Prime eligible

Don’t underestimate the power of an Amazon Prime tie-in here. An Amazon tablet priced at $300 coupled with a $79 Prime account – or a tablet/Prime bundle for, say, $329 – would cost less than the cheapest iPad 2. The duo would give users access to free streaming video and free shipping on Amazon products, both value-adds that would also entice users to buy more Amazon stuff in the way of pay-per-view videos and the gabillion or so products that ship free with a Prime account. It’s also pretty easy to imagine Amazon throwing plenty of freebies and special offers the way of Tablet/Prime owners – everything from free apps and music/video downloads to special “Gold Box” style offers immediately jump to mind.

Amazon’s massive inventory of digital and physical products, and the enormous distribution channels already in place to support them, is why Apple may be scared of Amazon – scared enough to sue them for using the term “App Store.” Tablets are hot, but specs are meaningless to the average consumer. Experience and value move products. Apple has a killer experience in place with iPad and the iTunes ecosystem. No other tablet maker has come close to replicating that massively successful combination. Amazon has a real chance to compete with Apple by building a better Android experience – by way of their own App, Music, Video, and Book Stores – and pairing that with something Apple can’t match: Good ol’ fashioned bargains.

Apple’s not about to offer you free two-day shipping on baby food, lawn care products and linens as part of an unlimited streaming media upgrade for your iPad 2. They can’t; they don’t sell that stuff. But Amazon does. And they stream media, too. Suddenly the thought of an Amazon tablet on which to shop for, buy, and consume it all sounds pretty interesting. Look out, Apple, your iTunes empire could be facing some competition from a strange 21st Century digital media-meets-discount department store hybrid.

[Via: Engadget, The New York Times]