Amazon has a division called Lab 126, in Cupertino, CA. Lab 126 brought Amazon the Kindle. Their website says "We design and develop easy-to-use, highly integrated consumer products." Products, as in more than one. And their job board has a number of listings for electronics hardware specialists. Those could be for future releases of the Kindle, or they could be for other secret projects in development. The NY Times Bits Blog heard specifically that they are developing other consumer products. These devices are intended to enable people to buy more Amazon content, such as e-books, video rentals and purchases, and music.
Carnoy spoke with Amazon's Ian Freed, who acknowledged the company loves Apple's iPad. Its 9.7 inch screen shows video and book pages beautifully. That is, Amazon loves that the experience encourages consumers to buy more stuff from Amazon. Since Apple opened their own iBookstore and already has iTunes for music and video, Amazon is probably concerned about keeping their own digital sales growing. And what better way to do that than to move past the Kindle (books only) and sell their own tablet computer?
Apple products have a high profit margin. Amazon could undercut the iPad by selling its own tablet with Android OS. Carnoy figures a 6 inch screen at a minimum for such a product, so current Kindle customers would not have a smaller screen than they are already used to. (Compare with the Dell Streak's 5 inches.) A 7 inch screen would be a nicer size for AmazonVideo on Demand. The issue will be whether Amazon could keep the price reasonable (comparing to the iPad ($500-700) and the Streak ($300 with AT&T contract, $550 without).
Amazon is definitely up to something in Cupertino. Could it involve some green robots?