Upgrade Your Life: Is Amazon making a super cheap tablet to compete with the iPad?

(Update -- This press release just arrived in our inbox: "Amazon is holding a press conference September 28th." No details, no hints. So one can only speculate that this must be about their much-rumored tablet.)

Just about every manufacturer you can name wants a horse in 2011's tablet race. Of course that includes the companies you'd expect — Motorola with the Xoom, Samsung with the Galaxy Tab 10.1, and Apple's reigning iPad 2, of course — but it also means that some surprising contenders are jumping into the fray.

We may know Amazon best as an online mega-retailer, but based on the company's recent job postings, supply chain leaks, and hints from CEO Jeff Bezos, rumors abound that Amazon is at work on its very own tablet devices. If this speculation proves true, Amazon has plans to challenge Apple later this year — and take a bite out of Android tablets and e-readers while it's at it.

The juiciest information to date comes from Technology blog TechCrunch, which reportedly snagged some hands-on time with a prototype of Amazon's unannounced next-generation device. While nothing is certain in the gadget world until an official release, we now have plenty of details about what may be in the cards — but as always, remember to take these rumors with a grain of salt! What's on the horizon for Amazon's upcoming tablet? This episode of Upgrade Your Life will fill you in on the story so far.

1. New Kindle features
While no one can be sure of the new Kindle's exact details, here's a breakdown of its possible tech specs, according to early reports:

* 7" color touchscreen display
* Backlit LCD display
* 6 GB of internal storage (emphasis on Amazon Cloud Drive for further storage capacity)
* Single Core processor
* Wifi-enabled
* USB port
* Custom Android OS made for Amazon
* $250 price range
* No physical buttons
* Cover Flow-like user interface navigation
* Amazon Prime promotional offer
* Micro USB connection
* No cameras
* Rubberized back
* Wifi-only version at launch
* End of November release date

2. A hybrid tablet
The new Kindle will reportedly go well above and beyond the device's current capabilities, pleasing ebook lovers who might want a little more of the web and prospective tablet owners looking for an affordable entry point into the market.

If rumors are right, the next Kindle will run Android apps and have a reinvented interface, a $250 price tag, and a 7" color touchscreen, making it right at home in low-end tablet territory. The device is expected to go on sale in late November, but a more powerful, more expensive 10" version may still be in the works for early 2012 — one that would be even more of a full-fledged iPad rival than the 7" version.

While the current Kindle's low power, sun-friendly screen and epic battery life make it the perfect choice for avid readers, it can't browse the open web, run apps, or play games like a full-blown tablet. It stands to reason that Amazon would want to build upon the Kindle's success by taking the device to the next level.

3. Half the price of a true tablet
A beefed up Kindle still won't be able to directly compete with the iPad's processing power and massive selection of apps and games, but at a rumored $250, it could prove to be a viable, affordable iPad alternative. Consumers hesitant to invest in a tablet will find the price far less intimidating than the iPad's $500 price point — especially if digital reading is a priority.

Beyond the iPad, the new Amazon device will take direct aim at Barnes & Noble's tablet-like Nook Color. The Nook Color, released last October, offers a 7" touchscreen, email, a full web browser and even the support for many Android apps. Barnes & Noble's reader may not be a fully tricked out tablet, but at $249, it's a great compromise — especially if the iPad 2's starting price of $499 is out of reach.

With Android tablets like the Galaxy Tab 10.1 hovering right around the iPad's price range, a new Kindle could bridge the gap between a dedicated e-reader and a full tablet experience. And and it's no coincidence the price could be set right at $250.

The new Kindle also may offer some interesting tie-ins to Amazon Prime, the online retail giant's premium service. Amazon Prime subscribers pay $79 annually for free two day shipping on many items in the online marketplace in addition to unlimited access to streaming shows and movies with Amazon Instant Video.

Some rumors have suggested that Amazon Prime subscribers could get a special deal on the device, which would slash $50 off of the $250 price tag. It's also expected that a free Amazon Prime subscription will be bundled with the purchase of the new Kindle at full price.

4. Amazon plus Android
The full color screen isn't the only shake-up in the cards for the Kindle. Taking its cues from the Nook Color, the new Amazon device will reportedly run Android apps. The current Kindle runs a somewhat bare bones software system compared to iOS or Android. That operating system is sufficient for an ebook-centric device, but a new Kindle tablet means a new OS is in store: Android.

Like the Nook Color, the reinvented Kindle is rumored to run a modified version of Google's mobile operating system, but it won't look like any version of Android that we've seen to date. Instead of relying on Google's huge spread of services, the new hybrid tablet will reportedly tie everything back to Amazon.

Rather than steering users toward the Android Market for apps, it will point toward the Amazon App Store. Amazon's new custom user interface will also connect to Amazon's Cloud Drive for music and data storage, Amazon Instant Video for streaming TV and movies, and of course the Kindle ebook store for the written, digital word.

Don't have a Kindle but still want to build a collection of Amazon ebooks? Download the Kindle app, which is available for iPad, iPhone, Android, and just about every other gadget you can read on. Then, if you decide to spring for a Kindle later on, your ebooks won't be trapped in a competing digital bookstore.

More about the Kindle:

Tablet buyer's guide: Everything you need to know

How to choose the right Kindle

Kindle, iBooks, Nook, and Google Books: How to choose the best eBook store