Rumor: Amazon tablet enters production, shipping later this year

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Amazon has given Taiwan-based notebook maker Quanta Computer the order to start producing a tablet. Monthly orders during the peak season are expected to reach about somewhere between 700,000 units and 800,000 units. Quanta may start shipping the device as soon as the second half of this year, with the orders to contribute more than NT$100 billion ($3.5 billion) to the OEM's annual revenues in 2011. The device will also receive full support from Taiwan-based electrophoretic display (EPD) maker E Ink Holdings (EIH) for supplying touch panel as well as providing its Fringe Field Switching (FFS) technology, according to sources from upstream component makers cited by DigiTimes.

Unsurprisingly, neither Quanta, EIH, nor Amazon has commented on the report. Quanta is the tablet PC OEM partner for Research In Motion (RIM), Sony, and is reportedly aggressively courting Lenovo in hoping to land orders for its second-generation LePad. EIH has also recently been in contact with a Taiwan-based panel maker and is aiming to book up the maker's full capacity through a private investment. EIH wants to fully supply the capacity to Quanta in order to increase its profit from the patents of its FFS technology.

The rumor that Amazon is looking to build a tablet has been around for a while but it started to gain steam late last month. It was suggested that Samsung would build an Android tablet for the online retailer, to sell alongside its current Kindle e-book reader. The Kindle is the best-selling product on Amazon, and the company likely wants to keep pushing forward with it, but sporting a further reduced price tag. This will attract consumer demand from the education and consumer market, while the more expensive and more powerful tablet will be able to take on the broader market outside of the e-book reader space.

In addition to the Kindle ecosystem, the company has the Amazon Android App Store, its Cloud Drive service, and is in the meantime making sure to support its Kindle app on tablets. Even if the company doesn't launch its own tablet, it's going to be a big player in the tablet space.

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