So now that we’ve seen some details about the Amazon Kindle Tablet, I have to say that I’m a little disappointed in what the Amazon tablet is shaping up to be. The price seems pretty good compared to the Nook Color, and compared to the Kindle reader. This is the price Amazon should’ve gone for from the very beginning, not the early rumored $350 for the 7″ tablet. I still think there was a change of plan in the last minute, which is why the tablet has been delayed so much compared to the initial rumor about launching in August.

Granted we haven’t actually seen the tablet yet, but from the Techcrunch hands-on the tablet doesn’t look like anything special. It looks like a low-end tablet that should cost $250, kind of like the Lenovo A1 that will go for $199. And that’s exactly my problem with it. I expected a lot more from Amazon. I wanted them to wow us. I expected them to heavily subsidize a tablet with much better specs (the initial Tegra 2 chip would’ve been a good start, for the same price). But worst of all, they are going with the Nook Color strategy of creating a non-Android, locked down ecosystem. This may have been a good strategy for B&N, but it’s not for Amazon. Here’s why.

Amazon has the largest e-book marketshare. Most people are going to use the Kindle e-book store, no matter what the device is. If B&N would’ve went with an open tablet, just like every other Android tablet, you can bet most of the Nook Color customers would’ve  used the Kindle app to read books, not the Nook app.

You’d think, but why would they go with the “Nook” tablet then? Because it was a high quality Android tablet for a low price. For people who want the tablet functionality on their reader, there was no better choice than the Nook Color. But there would’ve been a lot of people who would’ve preferred the Kindle app, if the Nook Color was an open tablet. Plus, even if they weren’t buying it to use the Kindle app initially, they would still download the Kindle app, and then when they can’t find a book on their Nook app, they’d use the Kindle one instead, and eventually just keep using the Kindle app.

This is why B&N adopting a very open strategy for their “reader” tablet would’ve been a bad strategy for them, because they have a much smaller market share than Amazon and most people would use Kindle app anyway. And since they sold that tablet at near cost, thinking they could recoup the money from the books sold, that may have ended up being disastrous for them.

Now, does that mean that Amazon should follow the same strategy? Heck no! Amazon *should* keep their tablet as open as possible, and it’s for exactly the same reasons why B&N should keep it closed.

As I said, Amazon is a market leader in e-books – by far. They have something like 70% of the e-book market, with about 20% going to B&N and the rest to Sony, Apple and others. This means that the more devices there are out there that can run the Kindle app, the more people will use Kindle books, because “by default” most people will prefer the Kindle books. They know Amazon has the most e-books (something like 700,000 right now – not counting the 2 million or so public domain ones, which the others have, too).

So, sure, they can lock down their Kindle tablets, and “force” 100% of the customers to use only the Kindle app, instead of allowing 30% of them to use some other reader app. But that is *very* short-sighted of them. Why limit your numbers by locking down the Android ecosystem, to your own Amazon ecosystem, and sell only say 3 million this year, when you could open it up to invite all the Android fans to it and sell 6 million, or 9 million? And here’s how the math works. 70% out of 6 million is 4.2 million – which is significantly more than the 3 million “100% Amazon Kindle users”. Amazon should *help* expand the Android ecosystem, because that’s in their benefit, too – to have Kindle on all Android devices everywhere.

When we heard the first rumors about the Amazon tablet, we all thought it would be the first company in the Android ecosystem to take on the iPad in a big way, myself included, but if they are trying to create their own little niche ecosystem where only Amazon apps work, then 2 things will happen: 1) they will sell a lot less than they could’ve have otherwise, and 2) the people who want a cheap quality tablet (presuming it will be that), will take it and install a custom Android ROM on it anyway, and yes, use Nook or Sony apps if they want to.

Here’s a way Amazon’s strategy “might” have worked – if they showed us some special kind of hardware in their tablet – an innovation, something I would expect from Amazon, normally. If they showed us a type of display that works just like an LCD for a tablet, but is also reflective like e-ink in direct sunlight, then Amazon’s strategy might have had a lot more success. But right now, from the rumors, it looks like it’s just a Nook Color competitor, and it uses the same Nook Color strategy with the locked down ecosystem,when it really shouldn’t – as I explained above.

I don’t know how much the Amazon Kindle tablet customers will care about this, but by going closed with their tablet, Amazon is also staying way behind Google in features and functionality. The TechCrunch report says it might use Android 2.1 – that’s terrible. And no matter what improvements they’ve brought to it since they started working on it, I really don’t see how Amazon’s software engineer team would have caught up with Google’s huge Android team, and release an OS that will be on par with Android 4.0 IceCream Sandwich. How does that sound to Android developers who may have been interested in developing for the Amazon tablet? Not too good I assume, and some are already very upset with Amazon about their App Store.

To conclude, I’d say the Amazon Kindle tablet will have some success because of the Amazon branding, and will probably even beat the Nook Color and Nook Color 2 in sales. That’s to be expected. But I just think it could’ve been so much more, and it could’ve benefited from the good will of the whole Android community. But by doing this, I can’t help but think it will remain a pretty niche device, that will be mostly used by people who are heavy readers, and might want to upgrade from a Kindle 3 to a tablet, and also by people who want to buy it to install a custom “open” Android ROM on it, but that’s a very tiny part of the market for it.