Amazon set to rival Apple with tablet launch

Apple is girding for the entry of the first major challenger to its iPad tablet computer, a device from Amazon, whose low-cost Kindle is the most popular e-reader on the market.

In a tactic more usually associated with Apple, Amazon has invited the media to a mysterious event tomorrow and batted away all inquiries as to what will be unveiled there, but the speculation is focused on a tablet that Amazon's chief executive Jeff Bezos has been dropping hints about for months.

Analysts are already hailing the arrival of the device as "a game-changer" that will shake Apple's near monopoly of the tablet computer market and catapult Amazon into the big league of companies selling digital content. As well as selling electronic books, Amazon will also be able to go head-to-head with Apple in the sale or rental of movies and software "apps" for tablet devices.

Apple, meanwhile, has sold 29 million iPads since the device was unveiled by then-chief executive Steve Jobs 15 months ago. Its launch represented a serious challenge to the Amazon Kindle, which has just over 50 per cent of the e-reader market, but which risked being undermined by a tablet device that could act as an effective e-reader as well as doing much more.

Apple shareholders see the prospect of a full-service tablet from Amazon as the most serious challenge yet to the iPad, and Apple shares were down more than 2 per cent yesterday.

According to well-informed sources, it is a big departure from the original Kindle, which used e-ink rather than the back-lit screens typical of computers, and features a touchscreen interface. It will run Google's Android operating system, for which Amazon already operates an app store selling software. And it will sell for about half the price of the iPad.

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Apple is set to have 73 per cent of the tablet market this year, despite new rivals such as BlackBerry Playbook and the Galaxy Tab, according to Gartner.