It’s called simply the “Amazon Kindle”. But it’s not like any Kindle you’ve seen before. It displays content in full color. It has a 7-inch capacitive touch screen. And it runs Android.

Rumors of Amazon making a full-fledged tablet device have persisted for a while. I believe we were one of the first to report on the possibility from a credible source — the same person who accurately called Amazon’s Android Appstore. That source was dead-on again, it just took Amazon longer than anticipated to get the device ready to go. They’re now close.

How do I know all of this? Well, not only have I heard about the device, I’ve seen it and used it. And I’m happy to report that it’s going to be a big deal. Huge, potentially.

First of all, before every commenter asks, no, sadly, I don’t have any pictures to share. That was the one condition of me getting this information. So instead you’ll have to rely on my prose to draw a picture of the device in your head. Or you can just look at a BlackBerry PlayBook — because it looks very similar in terms of form-factor.

So here’s what I know and what I saw:

Again, the device is a 7-inch tablet with a capacitive touch screen. It is multi-touch, but from what I saw, I believe the reports that it relies on a two-finger multi-touch (instead of 10-finger, like the iPad uses) are accurate. This will be the first Kindle with a full-color screen. And yes, it is back-lit. There is no e-ink to be found anywhere on this device.

Earlier this week, reports suggested that a 7-inch Amazon tablet could be released in October, with a larger, 10-inch version to follow next year. That’s somewhat accurate. As of right now, Amazon’s only definitive plan is to release this 7-inch Kindle tablet and they’re targeting the end of November to do that. The version I saw was a DVT (Design Verification Testing) unit. These have started floating around the company. It’s ready, they’re just tweaking the software now. If it’s not in production yet, it will be very soon.

Originally, Amazon had planned to launch a 7-inch and a 10-inch tablet at the same time. But that plan changed this summer. Now they’re betting everything on the 7-inch. If it’s a hit, they will release the more expensive 10-inch tablet in Q1 2012.

So how much will the 7-inch Kindle cost? $250.

Yes, Amazon has been able to trim the cost of the device to half of the entry-level iPad. And it will be the same price as Barnes & Noble’s Nook Color, which this will very obviously compete with directly. Both have 7-inch color touch screens. Both run Android.

And this is where things get really interesting. As anticipated, Amazon has forked Android to build their own version for the Kindle. Simply put: it looks nothing like the Android you’re used to seeing.

The interface is all Amazon and Kindle. It’s black, dark blue, and a bunch of orange. The main screen is a carousel that looks like Cover Flow in iTunes which displays all the content you have on the device. This includes books, apps, movies, etc. Below the main carousel is a dock to pin your favorite items in one easy-to-access place. When you turn the device horizontally, the dock disappears below the fold.

Above the dock is the status bar (time, battery, etc) and this doubles as a notification tray. When apps have updates, or when new subscriptions are ready for you to view, they appear here. The top bar shows “YOUR NAME’s Kindle” and then the number of notifications you have in bright orange. It looks quite nice.

There are no physical buttons on the surface of the device. You bring up a lower navigation menu by tapping the screen once. This can take you back home, etc.

But the key for Amazon is just how deeply integrated all of their services are. Amazon’s content store is always just one click away. The book reader is a Kindle app (which looks similar to how it does on Android and iOS now). The music player is Amazon’s Cloud Player. The movie player is Amazon’s Instant Video player. The app store is Amazon’s Android Appstore.

Google’s Android Market is nowhere to be found. In fact, no Google app is anywhere to be found. This is Android fully forked. My understanding is that the Kindle OS was built on top of some version of Android prior to 2.2. And Amazon will keep building on top of that of that over time. In other words, this won’t be getting “Honeycomb” or “Ice Cream Sandwich” — or if it does, users will never know it because that will only be the underpinnings of the OS. Any visual changes will be all Amazon.

They are not working with Google on this. At all.

There is a web browser (of course), and while it’s styled a bit to match the Kindle UI, it looks pretty much the same as the Android’s WebKit browser. Yes, it has tabs! And yes, Google Search is still the default (the Kindle also has its own search tool to find content on your device).

Overall, the UI of this Kindle felt very responsive. You can flick through the carousel seamlessly. This is something Amazon has apparently been working on quite a bit, I’m told. And they continue to. Some of the page-turning touch mechanics still needed a bit of work in the version I used.

I believe the visual web reading app Pulse will be bundled with the Kindle. A game like Angry Birds may be as well. Again, it uses Amazon’s Android Appstore, so all of the content accepted into that store will play well on this device. Apps, games, content, you name it. Amazon creating their own app store is starting to make a lot more sense, and looks potentially very smart (as anticipated).

A few more bits about the hardware:

I believe it is running on a single-core chip (though I’m not 100 percent sure). My understanding is that the 10-inch version, if it comes, will have a dual-core chip.

I also believe the device only has 6 GB of internal storage. The idea is that this will be more of a “cloud device” for things like music and movies. The storage is meant for storing books and apps There were a few references to an SD card expansion, but I couldn’t find a slot on the hardware itself.

This initial version of the device will be WiFi-only. Amazon is supposedly working with carriers to possibly product 3G-enabled versions (as they have with their other Kindles), but that won’t be the case at launch.

I’m not sure what the battery life is like (I only played with it for about an hour), but I imagine it is very good and in line with other tablets — 10 hours or so.

The back of the device is rubbery — again, it’s very similar to the PlayBook (it’s black as well). The power button is underneath if you’re holding it vertically (which is a bit odd — but it’s obviously to the side if you’re holding it horizontally). There’s a micro-USB port (presumably for powering the device as well). The speakers are of the top of the device (again, if it’s being held vertically).

There is no camera.

So why will people buy this device instead of a Nook Color? Well, beyond the deep Amazon services integration, there will be two other reasons, I believe. First, Amazon is going to promote the hell out of this thing on Amazon.com. Second, the plan right now is to give buyers a free subscription to Amazon Prime.

The service, which Amazon currently sells for $79 a year, gives users access things like free unlimited two-day shipping, and no minimum purchases for free shipping. More importantly for this product, Prime users get access to Amazon’s Instant Video service. There will be more Kindle-related perks, I imagine.

As far as the existing e-ink-based Kindles, all I’ve heard is that they’ll continue to co-exist with this new tablet (though the DX may or may not stick around). They’ll simply be the low-end, low-cost Kindles, whereas this new one will be the high-end one (at least until the 10-inch version comes out, if it does). One source said it doesn’t seem likely that Amazon is going to release a touch-screen e-ink Kindle, like the new Nook, anytime soon. But none of that is confirmed, it’s simply speculation based on the emphasis on getting this new tablet to market.

Oh and one more thing: Amazon has been working on a multi-touch screen/e-ink hybrid tablet device. But that’s nowhere near completion, I’m told. So for now, this new Kindle will have to do.

That’s all for now. I suspect even more information (and pictures) will start leaking out soon — again, the new Kindle is very close to being done. Not only is the device real, from what I’ve seen, it’s solid. I suspect it will be on many people’s holiday wish-list this year.

Amazon's redesign will change the goods you buy and how you buy them. Before you bought a DVD to stick in your computer. But soon you will purchase a movie to stream on your Amazon tablet. Of course you can still get a physical DVD from Amazon, but the site will entice you toward the digital product. "That's just what this redesign does--it puts those features front and center," David Selinger, a former Amazon manager and current chief executive of RichRelevance told Woo. "As shoppers migrate to smaller, more interactive screens such as tablets, making the content dynamic and personalized to each individual consumer becomes overwhelmingly important."

I hope they don't give up on e-ink readers, personally.

I got a Kindle for my wife and I have to say that I also really enjoy it. I was out camping quite a bit last month and being able to sit back, in direct sunlight, and have access to dozens of stored books on a very lightweight device.... all the while knowing that this sucker's battery has at least 3 more weeks left on a single charge.... it was very pleasant.

Can't do that with anything but an e-ink reader.

Ooooooh, want.

Edit: But only if the colors will be crisp and vibrant. Otherwise I'll stick with my iPad.

It'll obviously be able to play fullscreen video from Amazon. I'd assume the other two as well, though it depends on if Amazon intends it to be solely an Amazon consumption device or not.