Amazon prepping color Kindle with video streaming?

Rumors have already been circulating for months that Amazon is developing a tablet, possibly in partnership with Samsung. A new report suggests that the online retailer is developing an advanced Kindle in color.

According to the Detwiler Fenton research firm, Amazon is developing a colorized version of the Kindle that will be able to rent and stream videos. It is also still being referred to by the code name "Hollywood," which was mentioned last month alongside another rumored Amazon tablet known so far as "Coyote." (Hopefully those are just working titles.)

Here's the rest of the details the firm has supposedly uncovered so far:

The device is expected to incorporate a 10” color screen and have a more robust applications processor than that expected for the smaller color Kindles AMZN is also expected to launch for the holiday season. It is particularly interesting to note that AMZN is expected to include its movie service for free for an unspecified amount of time to buyers of the device. This is the same movie service AMZN already offers for free to its Prime customers. We expect pricing will be in the $399 range in order to create enough of a pricing differential between it and the iPad.

If true, a device with these features and pricing would find itself somewhere between full-fledged tablets (i.e. iPad, Galaxy Tab, etc.) and the Nook Color. Barnes & Noble's offering has already been heralded as one of the better (if not best) Android tablet available with its price point and Froyo on-board.

While it is capable of video playback, this new version of the Kindle would completely surpass it. However, it seems a bit unfair to compare the two, not just because the color Kindle isn't official yet, but also because Amazon's rumored new tablet would be just that: an actual tablet - not an e-book reader anymore.

Detwiler Fenton didn't mention anything about the integration of Amazon's Cloud Drive digital storage locker, but you can bet that anything Amazon builds from now on is going to incorporate that amenity.

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