So M.G. Siegler has gotten his hands on Amazon’s new tablet.  It’s actually a pretty packed article with just about every sentence adding new information.  But here are the basics…

First of all, before every commenter asks, no, sadly, I don’t have any pictures to share. That was the one condition of me getting this information. So instead you’ll have to rely on my prose to draw a picture of the device in your head. Or you can just look at a BlackBerry PlayBook — because it looks very similar in terms of form-factor.

So here’s what I know and what I saw:

Again, the device is a 7-inch tablet with a capacitive touch screen. It is multi-touch, but from what I saw, I believe the reports that it relies on a two-finger multi-touch (instead of 10-finger, like the iPad uses) are accurate. This will be the first Kindle with a full-color screen. And yes, it is back-lit. There is no e-ink to be found anywhere on this device.

And here’s the part I find most interesting (and will focus on for this post)…

But the key for Amazon is just how deeply integrated all of their services are. Amazon’s content store is always just one click away. The book reader is a Kindle app (which looks similar to how it does on Android and iOS now). The music player is Amazon’s Cloud Player. The movie player is Amazon’s Instant Video player. The app store is Amazon’s Android Appstore.

Google’s Android Market is nowhere to be found. In fact, no Google app is anywhere to be found. This is Android fully forked. My understanding is that the Kindle OS was built on top of some version of Android prior to 2.2. And Amazon will keep building on top of that of that over time. In other words, this won’t be getting “Honeycomb” or “Ice Cream Sandwich” — or if it does, users will never know it because that will only be the underpinnings of the OS. Any visual changes will be all Amazon.

One  more quote…

the plan right now is to give buyers a free subscription to Amazon Prime.

The service, which Amazon currently sells for $79 a year, gives users access things like free unlimited two-day shipping, and no minimum purchases for free shipping. More importantly for this product, Prime users get access to Amazon’s Instant Video service. There will be more Kindle-related perks, I imagine.

I saw this coming from a mile away (or how ever far away you consider May 2011).  Not because I’m so smart but because this is what Amazon does.  Once we (pretty much) knew there would be an Amazon tablet this was the only move consistent with their past behavior.  Having seen this coming I’ve had more time to think on it and I think that’s given me two insights.

#1.  People are seeing this device in the wrong context. 

If you look an Hacker News you see responses like this (Credit: markgx)

Amazon could carve out the "sub-iPad" tablet market if their $250 price point holds and they release a usable tablet. Look at what happened with the HP firesale.

I think that’s the wrong mindset.  That continues to see the device as a “tablet” when in fact it is a media device.  Its competition isn’t the Galaxy Tab and the Xoom.  Its competition is the iPod Touch and the Portable DVD player. 

Think of it this way.  Most suburban families I know have a portable 3G/4G device that allows multiple connections.  So while they’re on a road trip all the kids can connect laptops and browse the web.  Beyond that we’re reaching a tipping point as far as cell phone tethering is considered.  I’ve even heard Ford is looking at building cars with WiFi built in (using the Bluetooth in your phone to provide the actual connection).  so the era of ubiquitous internet is almost upon us and it brings cloud based media with it. 

When that happens people will look for cheap media devices.   Cheap enough to buy for each family member.  Cheap enough that they can break without it being the end of the world. 

Amazon provides that and backs it with a first class media service. 

Think about it.  Amazon’s On-Demand Video Service is built into most high end TVs, blu ray players and surround sound systems these days.  It’s available on the Xbox 360, Playstation3 and Wii.  Plus you can get it on Tivo, Roku, and others.  So if you buy a Movie or TV show on Amazon you’ll probably have access to it on your TV already.   Which means you can buy media on your tablet and be confident it will be available wherever you want to consume it. 

Of course most Apple users will tell you they could already do that on their iPad/AppleTV/iPhone.  But that’s the point. 

#2.  It’s Amazon, not Google, that Apple should be afraid of. 

Amazon has built up the infrastructure they need to challenge Apple and they’ve used Google’s love of openness to co-opt Android (filling their hardware needs).  So while Google struggles with beta services that no one seems to use Amazon already has a music service, video service, book service and app store ready to go.   More to the point Amazon’s enlisted every Android tablet manufacturer whether they know it or not.  Right now I can use Amazon’s Video and MP3 service on my Xoom via Flash.  So if Mom or Dad in the family above wants to buy themself a higher end tablet they can do so without losing access to all their Amazon purchases.  

Of course Apple’s still in the lead.   People have invested heavily in their iTunes libraries and getting them to switch won’t be easy.  But Amazon definitely has a shot.  To give you just one idea imagine an iTunes Match like service where Amazon makes your iTunes library streamable from their servers.  That would change the game in an instant.