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Watch out iPad: Amazon poised for color, touchscreen tab later this year

by Howard Wolinsky

Goodbye monochrome. And hello full color. And touchscreen.

Amazon (AMZN) is getting ready to take on the Apple’s (AAPL) iPad in the second half of this year, according to a report out of Taiwan.

Quanta Computer (2382.TW) has received orders from Amazon for its own tab with a touchscreen and an LCD technology known as ‘fringe field switching’ offering superior color, according to DigiTimes. E Ink Holdings (8069.TWO) is building the touchscreen.

The Amazon tab will reportedly ship in the second half of this year with an order of 700,000 to 800,000 units a month. Quanta will take in $3.5 billion, according to DigiTimes’ sources.

Quanta, which makes tabs for Research In Motion (RIMM) and Sony (SNE), of course had nothing to say.

“The sources pointed out that Amazon's Kindle still has strong sales, but the e-book reader is currently still unable to successfully cut into the markets outside of North America and Europe,” DigiTimes said. “Therefore, Amazon internally plans to reduce Kindle's market price to attract consumer demand from the education and consumer market, while (it) will push tablet PC using its advantage in software and content resources to challenge iPad2.”

The tea leaf readers have been predicting Amazon’s entry into the tab market for some time.

ZDNet noted that Amazon has put all the pieces together for a device running Google’s (GOOG) Android OS optimized for tabs.

Also, making the case, ZDNet noted:

* Amazon launched an Android app marketplace.

* Amazon rolled out Cloud Drive and Cloud Player to store music and docs.

* And the company has its Kindle apps, including one optimized for Android Honeycomb.

“Put it all together and Amazon has the tools to deliver content to tablets—something other device makers such as Samsung (005930.KS), Research in Motion and others haven’t been able to pull off,” said Larry Dignan, ZDNet’s Editor in Chief.