All signs seem to point to a big announcement from Amazon about the new Android tablet the company plans to release in time for the Holiday shopping season.

So what can we expect from Android’s first proper foray into the tablet market? There is already speculation about the new device, plus the inevitable comparisons to the mighty iPad and whether it can stand a chance up against Apple’s behemoth.

Size matters

MG Seigler at TechCrunch had some hands-on time with the 7-inch capacitive touchscreen tablet. He claims that it will still carry the familiar Amazon Kindle name (possibly the “Kindle Fire”) but will offer the capabilities of a full Android tablet. The price point is expected to be around $250-$300, which seriously undercuts Apple’s iPad. This also puts it around the same price as Barnes & Noble’s Nook Color, an e-reader which, with a recent software update, also gained the capabilities of a regular Android tablet.

There are also rumors that Amazon will offer a 10-inch version too, and this seems like a nice strategy. The 7-inch size format, for many, is not enough of an upgrade over larger smartphones, while still feeling too small for others. However, that could make it a perfect e-reader with a few more bells and whistles. Meanwhile, a 10-inch Amazon device could compete nicely with other Android tablets and go up against Apple’s iPad. This is particularly true if it is priced right, captures the public’s imagination and offers a good suite of apps to truly make it pop.

Shaking up the market?

Tony Bradley at PCWorld feels the new Amazon tablet has the potential to be a real game-changer. Though the iPad is likely to maintain its dominance in the near-term, the Amazon tablet has an opportunity to forge a market of its own. Offering tight integration with Amazon’s online store and the Kindle e-reader, as well as giving prospective buyers a rumored free Amazon Prime membership (a $79 per year value), could make it an attractive purchase. Prime not only offers free two-day shipping on any purchase, but also access to the company’s instant video streaming services

We could end up with a device offering something more than just your standard e-reader with all the snazzy features and app capabilities of Android. It could also satisfy those who’ve been on the fence about ponying-up for a Kindle, while also enhancing the basic tablet experience with its tight Amazon integration.

Android… the Achilles heel?

As Tony Bradley points out, if Amazon chooses to customize Android too much, it could be disastrous if not executed well. At the same time, we won’t know how the forthcoming Android update (aka Ice Cream Sandwich, which hopes to offer a seamless shared Android experience across all devices, whether smartphones or tablets) will fit in with Amazon if they’ve chosen to tweak the custom Android experience greatly. Will the device even feature the regular Google Android Market or just Amazon’s Appstore only? What about hardware? Will there be a camera, enough storage space, and decent specs so it runs well? We’ll find out more soon, hopefully.

Once again, any Android tablet will feel the shadowy spectre of the iPad hanging over it like a dark cloud. The comparisons are inevitable: the Android tablet app market still remains a little sparse, even though it’s definitely improving. Android’s OS is still a little unpolished, but it’s getting better. However, if Amazon has done enough tweaking, perhaps its custom OS and Android backbone will be perfect.

Right now all tablets will be held up in comparison to the mighty iPad (whether rightly or wrongly), but priced right and offering a great set of alternative features, maybe Amazon will be the first to truly compete and provide something we’re yet to experience: a real threat to the iPad.