Amazon to launch tablet PC this year

SAN FRANCISCO: The world's largest Internet retailer, Amazon, will launch a tablet computer this year to sell more digital goods, analysts and investors have said.

Amazon plans to introduce a tablet with a nine-inch screen that will run on Google's Android operating system before October, The Wall Street Journal reported on Wednesday, citing unidentified people familiar with the matter.

Analysts and investors have been expecting a tablet computer from Amazon for several months. Its shares hit a record high earlier this month, partly due to optimism over the new device, said Mr Colin Sebastian, an analyst at Robert W. Baird.

'Amazon's brand, user base and digital media offering would position a tablet well against some of the other options out there,' Mr Sebastian said.

'Tablet users tend to purchase more digital items than comparable physical items, so Amazon wants more exposure to that.'

An Amazon spokesman did not respond to requests for comment on Wednesday.

But the online retailer's shares rose 1.1 per cent to close at US$213.50 (S$261) on Wednesday, leaving them up more than 17 per cent so far this year.

At least 1.5 million Amazon-branded tablets are being built for the third quarter, and the target for this year as a whole is from 4.5 million to five million units, wrote computer hardware analysts at Canaccord Genuity in a recent note to investors.

The move will increase competition between Amazon and Apple Inc, which makes the top-selling iPad tablet computer and also sells digital books, music and video through its iTunes service.

Apple said in March that since the original iPad was introduced in April last year, it has sold an estimated 20 million of the devices.

Mr Mark Gerber, director of technology research at Detwiler Fenton, said: 'In the tablet market, the No. 2 player will be Amazon. None of these other tablets have really taken off.'

Motorola Mobility's Xoom and Research in Motion's PlayBook have struggled partly because the tablets are not clearly connected to content, Mr Gerber explained. In contrast, the iPad is intertwined with iTunes, where users can buy music, videos and digital books.

Amazon already has lots of content that tablet users will be able to access, including Kindle e-books, music downloads and videos to buy, rent or stream. Mr Gerber said Amazon's tablet may come with free access to the company's video-on-demand streaming service for at least an introductory period.

In March, Amazon launched a Cloud Drive service that lets customers store files on its servers. In the same month, it also unveiled an Appstore for Android smartphones and tablets, getting it into the business of selling games. Both moves put it in closer competition with Apple, which offers similar services.

While Amazon is creeping onto Apple's turf, analysts say the online company is launching a tablet for different reasons. Apple offers content to drive sales of its gadgets, while Amazon wants a tablet to get customers to buy more of its other products.

Said Mr Bill Smead, chief investment officer at investment company Smead Capital Management: 'At the margin, maybe they can make some money selling a tablet. But Amazon is really doing it to support their core business.'

Mr Gene Alvarez, of technology research company Gartner, says launching a tablet will allow Amazon to tap the growth of mobile commerce, which allows consumers to make payments via mobile devices.

The total value of mobile payments may reach US$670 billion by 2015, according to a recent Juniper Research forecast.