Up to this point, tablets and e-readers have been distinct categories of devices, though a tablet can be used as an e-reader, as a PC or notebook also can run the Amazon Kindle app, for example. That will start to change this fall, as Amazon unveils its expected Android (News - Alert)-powered tablet, and offers yet one more way to test the balance of features and price in the tablet space.

Expected to feature a nine-inch screen, bigger than a Kindle at six inches but smaller than the Kindle DX at nearly 10 inches, Amazon will get a chance to test consumer reaction to a device that bridges the e-reader and tablet markets.

But Amazon also is going to test the tablet business model and retail pricing as well. Amazon is expected to aim for a disruptive price, “hundreds of dollars less than the iPad.” Some believe the pricing will be set at around the $250 price of the Barnes and Noble Nook Color; more like an e-reader than a tablet, in other words.

That price is probably below manufacturing costs, so Amazon will essentially try to subsidize the device, hoping to recoup the subsidies by building content sales. That approach is similar to what mobile service providers do when they subsidize the cost of smart phones.

Amazon already has taken steps in that direction, offering a lower-priced Kindle that displays ads, or a slightly higher priced version that does not.

For Amazon, selling a low-priced tablet might allow it to expand distribution of its Appstore, Cloud Player, Instant Video and other services that normally won't work on

Kindle devices.

Aside from Amazon’s obvious interest in creating multiple platforms that support the content products it sells, the new approaches will create even more choice for consumers, matching devices to application profiles.

Today’s early tablet adopters are using print media, PCs, and other devices less often than they used to, according to Sarah Rotman Epps, Forrester Research (News - Alert) analyst. Some 31 percent of tablet owners surveyed report they are using their PCs less, while 26 percent are using their notebooks or laptops less.

What that might indicate is that there has been a latent, untapped market for content consumption devices. In essence, content consumption demand has been hidden by availability of devices better optimized for content creation. If you casually observe what people actually do on tablets, most of the time, there is relatively little “content creation,” with the exception of communications (messages).

In that sense, tablet usage is tilted to consumption rather than creation in the same way that smart phones (in non-voice mode) are mostly used to consume content. The “content creation” is mostly short text or photo-sharing communications.

In fact, most consumer devices are about consumption rather than creation. TVs, radios, CD players, DVRs, game consoles, MP3 players, e-readers and tablets share the consumption device profile. That isn’t to say people cannot consume content on their PCs, simply to note that the PC remains the primary content creation device, with the exception of the camera.

Of the tablet owners surveyed by Forrester Research, 23 percent reported using their portable game player less, while 20 percent said they are using their iPod or MP3 player less. About 15 percent reported using their mobile phone less than they used to.

E-reader use seemed to be lower in about 11 percent of cases, while nine percent reported lower use of their game consoles. Some nine percent say they use television less.

Amazon’s approach to the tablet market will offer consumers another choice of devices to match their particular consumption profiles.

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