Amazon (AMZN) has quickly asserted itself in the mobile market. It released its Amazon Appstore to rival Google’s Android Market, it dropped a cloud music player service with Android support and left both Google (GOOG) and Apple (AAPL) in the dust on having anything to compete, and it’s testing the waters of near-field communication, a pond in which Google is already waist-deep.

Now Amazon has a new trick up its sleeve — the Kindle. The company announced it will release a $114 ad-supported version of its popular e-book reader. According to Mashable, the Wi-Fi-only Kindle 3 is called Kindle with Special Offers, and is $25 cheaper than the ad-less version of the same.

The six-inch Kindle 3 weighs 8.5 ounces and is available for pre-order on now. The device will ship on May 3. On its website, Amazon describes some of the “special offers” (ads) users will be receiving, and they actually don’t sound all bad — $20 Amazon gift cards for $10, for example. The ads also don’t intrude on the actual reading of eBooks, and are instead relegated to screen savers and menus.

Here’s where this new Kindle gets interesting, though: although it’s only $25 less than a Kindle 3 without ad support, it’s still a ludicrously low $114. That makes it a hyper-affordable e-book reader, but Amazon seems to have plans to make the Kindle line a lot more than just a digital screen for novels. We’ve been hearing rumblings that Amazon is working on an Android-running Kindle device — which could make this not only a bargain-priced e-reader to compete with Android tablets and the iPad 2 (which goes for better than four times the price of the Kindle at $499), but also a bargain-basement Android tablet with capabilities peripheral to reading.

Of course, the Kindle wouldn’t be able to do everything that an iPad 2 or a comparable Android tab like the Motorola (MMI) Xoom or Samsung (005930.KS) Galaxy Tab can, but it will be interesting to see what kinds of things the Kindle might be capable of if Amazon goes the Android route. Barnes & Noble’s (BKS) rival e-reader, the Nook, already has access to Android market places; Amazon could easily go the same route and also use the e-reader as a way to market apps in its Appstore.

Kindle won’t be replacing anybody’s mainstream Android tablets, more than likely, but it can offer a great entry point into the market at almost no cost. It seems like Amazon could be testing the waters for an ad-supported tablet that would vastly undercut the rest of the market, especially given the fact that the Kindle is already pretty cheap, and the ad support doesn’t greatly reduce the price.

Even if this isn’t part of a bigger plan by Amazon, a $114 Kindle will likely have a lot of people taking the plunge to check the device out, given how unobtrusive Amazon claims the ads are. The device has been selling well despite competition from bigger tablets like the iPad 2 — reducing the price further could help Amazon cut into the e-reading market and turn bookworms away from becoming Android and iPad buyers.