I love Amazon. I think the Kindle is very cool. I really think Amazon is the only company capable of leveraging something that could successfully compete with the iPad.

MG Siegler just revealed that he has seen and touched and used a device intended for that purpose – a color Kindle touchscreen device with a 7 inch screen running an Amazon-developed fork of Android. It won’t support the existing Android marketplace – it is rather designed to be primarily a reading/media/web device, leveraging Amazon’s book, music and video sales engines.

…and they plan to sell it for $250, starting in November.

This fits right into my idea of what might be a credible iPad competitor. (Not an “iPad Killer”. Unless someone can compete with the mighty iOS software library, there can be no such thing. Period.) They could do what everyone else has failed to do – create a real tablet market as opposed to an iPad market.

And yet…

I almost hate myself for thinking of this, but…

Do y’all remember back before the iPad was released and rumors floated around about a 7 inch screen device in the works at Apple? Even after the iPad came out, there were persistent stories about prototypes with a smaller form factor. I even vaguely recall some half-believable stories about Apple lining up a supply of such screens. Nothing ever surfaced, however.

But we know Apple can build such a device. That’s pretty much a lead-pipe cinch. I’d give good odds that a prototype exists of a 7 inch iPad. Of course, they have no reason to release such a device as long as they can already sell every iPad they can make. Unless a viable alternative appears at the lower end. Like, say, now.

Suppose… suppose they built it. In fact, suppose they are ready to build it now.

What price point could Apple hit with a device equivalent to an iPad 1 (equivalent processor, no camera, no GPS, wi-fi only, 16 GB flash memory) sporting a 7 inch screen? Could they hit a $250 price to match the new Amazon Color Kindle? Almost certainly.

In truth, they wouldn’t have to hit a $250 price point at all. The added value of a full-fledged iOS device that would run all existing iOS software (possible on a 7 inch device if the screen resolution matched the iPad 1 in a smaller form factor) would make the iPad Mini a no-brainer purchase over a Kindle Color even at $300.

The question is not “Could they do it?” – the question is “Would they do it?”. It might even be “Have they already done it and just not pulled the trigger?”.

Yews, I know it is positively paranoid of me to think of such a thing – Machiavellian McLimore, I am. But still…

Could they…? Would they…? Will they…? HAVE they…?

Isn’t there an Apple event coming up real soon…?