Everyone is waiting for tomorrow’s Amazon press event, where it is believed that Amazon will announce their first tablet, which according to many analyst will be the first true iPad competitor (Yes, I know same claims have been made for every tablet launched since iPad in 2010). The reason behind this optimism is the rumor that Amazon will sell their tablet for much less than iPad’s price ($499), even though the Amazon tablet will be a comparable product.

However, as we have written before it is almost impossible to sell a tablet comparable to iPad for less than $400 and if Amazon wants to achieve lower price point they will have to compromise on quality. By using lower quality LCD screen, cheaper casing, slower ARM single core processor and less flash memory. And, it looks like Amazon did that. Ryan Block posted on GDGT that Amazon tablet team partnered up with ODM (original design manufacturer) Quanta to design and produce the upcoming tablet. He wrote:

My sources tell me that RIM originally outsourced much of the hardware design and production of the PlayBook to mega-ODM Quanta -- a company that builds, and sometimes helps design, hardware for name brands. The time eventually came that Amazon's executives decided to do an Android tablet -- far likelier to respond to the dark-horse success of the Nook Color than to the adjacent success of the iPad -- Amazon's own Kindle group (called Lab 126) apparently opted not to take on the project, in favor of continuing to work solely on next-gen E-Ink-based devices.

From there, Amazon's team determined they could build a tablet without the help and experience of Lab 126, so they turned to Quanta, which helped them "shortcut" the development process by using the PlayBook as their hardware template. Of course, it's never quite that simple, and as I'm told Amazon ran into trouble, and eventually sacrifices were made (like using a slower processor).

He further adds that the upcoming Amazon tablet (which will be called Kindle Fire according to MG Siegler on TechCrunch) is a stopgap measure for the holiday season and is “supposed to be pretty poor”.

Adding more weight to Ryan’s claim, Concord Securities’ analyst Ming-Chi Kuo today said that Amazon’s upcoming 7-inch tablet codenamed “Hollywood” will use older OMAP 3 processor from Texas Instruments with 512MB RAM. OMAP 3 is a last generation ARM Cortex A8 based single core processor that is actually slower than the A4 processor that Apple used in the original iPad last year. Also, as we wrote before Amazon will use smaller and likely cheaper 7-inch screen (iPad has 9.7-inch), along with less onboard memory (less than 8GB) to keep the cost down.

As more and more details are being revealed about upcoming Amazon tablet, it has started to look less like iPad competitor and more like a low-end tablet aimed to compete with Barnes & Noble Nook Color. Lets wait and see what Amazon shows tomorrow.