In addition to its hardware sales, the tablet will provide a quick and convenient way for Amazon to capture a bigger chunk of the digital media market and allow customers to buy any of its millions of offerings from almost anywhere.
The 7-inch tablet is expected to appear within the next month or so and cost just $250. Such a low price from a trusted brand like Amazon will disrupt the entire tablet market.
"A proprietary tablet would allow Amazon to widen itscompetitive moat, improve consumer experience and benefit from the rapid growth in mobile usage," Jefferies & Co.'s (NYSE: JEF) Youssef Squali wrote in a report.
Although analysts expect Amazon to make little profit from the tablet itself, its potential for selling more of its digital wares such as e-books, movies, music and Google Inc. (Nasdaq: GOOG) Android apps is boundless.
The Kindle e-reader shows how hardware can drive media sales. It has helped Amazon capture 90% of the e-book market.
The Kindle e-reader will account for 9.9% of Amazon's total revenue next year, just five years after its debut, according to Citigroup Inc. (NYSE: C) analyst Mark Mahaney. Mahaney estimates about half of that revenue, $6.1 billion, will be from sales of the device, with the other half from e-books.
An Amazon Kindle Tablet will open up multiple digital avenues of growth.
Take online video sales, for example. Amazon has just 4.2% of that market, well behind the 65.48% share of Apple Inc.'s (Nasdaq: AAPL) iTunes Store.
In terms of additional revenue, the Kindle tablet could quickly rival that of the e-reader.
"There are companies that do this because they have to and there are companies that do this because they have impatient shareholders and I'm not sure what's driving this kind of statement," Michael Norris, a senior analyst at Simba Information, told The Associated Press. "It just seems daft."
The company's board said that it believed Barnes & Noble stock was "significantly undervalued" and that it had established a special committee to review its options.
Now industry innovator Apple Inc. (Nasdaq: AAPL) is taking that market to an entirely new level.
After months of spirited speculation, Apple on Wednesday introduced a full-color e-reader that doubles as a netbook.
Call 2010 the year of "necessary technology."
While 2009 has seen a dramatic turnaround in the world's stock markets, the rest of the key economic indicators - such as manufacturing, inventories, and jobs - have lagged behind. This has prompted less discretionary spending on technology, and even a postponement of some necessary purchases.