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Rumors about’s plans to release its own tablet computer have been around for months, but now they’re getting specific, and more interesting.

A new report by DigiTimes out of Taiwan says Amazon is gearing up for production of as many 1 million to 1.2 million of its new tablets in the third quarter of this year. The site calls that a conservative estimate, based on orders placed with component manufacturers.

That’s a distant second Apple’s reported iPad orders of 13.5 to 14.5 million units for the same time period. But it’s still second, ahead of all other tablet makers. If the report is true, that’s a major statement from Amazon about its aspirations for the new product, whatever it turns out to be.

Larry Dignan of ZDNet theorizes that the large volumes mean Amazon is likely to compete aggressively on price, subsidizing the cost of the tablet for end users with special deals and offers similar to its recent approach with the Kindle.

Amazon has so far been mum about its plans, although Jeff Bezos has all but confirmed that Amazon has something interesting up its sleeve in this area. It’s rumored to be coming with a free movie streaming service. The assumption is that the tablet will run on Google’s Android OS — hence Amazon’s Android Appstore — and potentially use a color version of the E Ink technology used (in black and white) in the company’s Kindle device.

At the company’s recent shareholder meeting, Bezos explained how tablets play into Amazon’s larger business (again without explicitly confirming Amazon’s plans.)

“Most of our customers shop with us from desktop or laptop computers, but people have a different posture with tablets,” he said. They “lean back on their sofa. People leaning back on their sofa, buying things from Amazon, is another tailwind for our business, so I’m very excited about that.”

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