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Amazon.com to Be Apple iPad's Biggest Competitor, Analyst Says

Amazon Kindle in Womans Hands at beach

A woman reads an Amazon Kindle ebook reader at the beach. The Internet retail giant is widely expected to be planning a larger tablet PC to compete with the iPad.. (Amazon.com)

Amazon.com may sell as many as five million tablet computers in the fourth quarter, making the largest Internet retailer the top competitor to Apple in this fast-growing niche of the consumer PC market, Forrester Research said on Monday.

Amazon.com has to price its tablet "significantly" below competing products and have enough supply to meet demand, but if the company can pull this off it can "easily" sell three to five million units in the final three months of 2011, Forrester's Sarah Rotman Epps predicted.

Apple has sold almost 30 million iPads since launching its tablet in April 2010. Rival products from companies including Samsung Electronics Co, Research in Motion and Motorola Mobility, have failed to seriously challenge that early lead. This month, Hewlett-Packard scrapped its TouchPad after sales languished.

"Thus far, Apple has faced many would-be competitors, but none have gained significant market share," Epps wrote. "Not only does Amazon have the potential to gain share quickly but its willingness to sell hardware at a loss, as it did with the Kindle, makes Amazon a nasty competitor."

One problem with iPad rivals has been that developers have so far waited before creating a lot of applications, or apps, for the devices, Forrester noted.

Apple claims about 100,000 custom-built iPad apps, while Google's Honeycomb platform, which is the tablet version of the Android operating system, has attracted fewer than 300 apps, according to Forrester.

"If Amazon's Android-based tablet sells in the millions, Android will suddenly appear much more attractive to developers who have taken a wait-and-see approach," Epps said.

Amazon shares were up 3 percent to $205.29 in early afternoon trading on Monday, leaving them up more than 10 percent so far this year.

Apple shares gained 1.9 percent to $390.83. The stock is up almost 19 percent so far in 2011.