Report: Amazon to release Android-powered tablet in Q3 will release a tablet product in the coming months running Google's (NASDAQ:GOOG) Android platform, according to a report in the Wall Street Journal, a move that would bring Amazon into closer competition with Apple (NASDAQ:AAPL) and its iPad.

The report, citing unnamed sources familiar with the matter, said Amazon will release the as-yet-unnamed product before October. The device will sport a 9-inch display but will not have a camera, and will be designed by an Asian manufacturer. However, the report noted that Amazon is designing its own tablet model, which could be released next year. Consumers will be able to use the tablet to access videos, music and digital books they purchase from Amazon, which will allow Amazon to better compete with Apple's iTunes and iBooks offerings.

Analysts said that the new tablet device could be a way for Amazon to get users to keep on buying digital content. "Mobility combined with online sales capability enables Amazon to be with the consumer at the time they want to purchase," Gartner analyst Gene Alvarez told Reuters. "Prior to mobile commerce, Amazon had to wait until you got in front of a computer."

It's unclear if the device will feature built-in wireless connections. Amazon is closely tied to the wireless industry; the company's first Kindle ereader launched with built-in support for Sprint Nextel's (NYSE:S) network. ABI Research recently reported that 25 percent of Apple's iPads in the first quarter shipped with built-in cellular wireless connections.

An Amazon spokesman cold not immediately be reached for comment, the Journal said.

Amazon CEO Jeff Bezos strongly hinted in May that his company will release a tablet based on Android. In an interview with Consumer Reports, Bezos said to "stay tuned" on the company's plans for a multipurpose tablet product. He suggested that such a device would supplement but not replace the popular Kindle.

Although there has been some speculation that Amazon might license webOS from Hewlett-Packard, Amazon has given multiple indications this year that it is backing Android. Amazon formally launched its Amazon Appstore for Android in late March, offering consumers a new channel to download applications optimized for Android smartphones and tablets. Shortly after the Appstore launched, Amazon unveiled a cloud-based music service called Cloud Drive that initially targeted Android devices.

Interestingly, the WSJ report also said Amazon will release two updated versions of its popular Kindle electronic reader in the third quarter. One will have a touchscreen display and the other will not, but will be an improved and cheaper version of the current Kindle.

AT&T Mobility (NYSE:T) said on Wednesday it will supply mobile broadband service to a $139 Kindle 3G, which will come with AT&T-sponsored ads and screensavers. The regular Kindle 3G will remain $189. 

For more:
- see this WSJ article (sub. req.)
- see this Reuters article
- see this separate Reuters article

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