A dedicated iPad station is seen in front of an iPhone at the Apple store in New York May 23, 2011.

Credit: Reuters/Shannon Stapleton

SAN FRANCISCO (Reuters) - Amazon.com Inc may sell as many as 5 million tablet computers in the fourth quarter, making the largest Internet retailer the top competitor to Apple Inc in this fast-growing niche of the consumer PC market, Forrester Research said on Monday.

Amazon.com has to price its tablet "significantly" below competing products and have enough supply to meet demand, but if the company can pull this off it can "easily" sell 3 million to 5 million units in the final three months of 2011, Forrester's Sarah Rotman Epps predicted.

Apple has sold almost 30 million iPads since launching its tablet in April 2010. Rival products from companies including Samsung Electronics Co, Research in Motion and Motorola Mobility have failed to mount a serious challenge to that early lead. This month, Hewlett-Packard scrapped its TouchPad after sales languished.

"Thus far, Apple has faced many would-be competitors, but none have gained significant market share," Epps wrote. "Not only does Amazon have the potential to gain share quickly but its willingness to sell hardware at a loss, as it did with the Kindle, makes Amazon a nasty competitor."

One problem with iPad rivals has been that developers have so far waited before creating a lot of applications, or apps, for the devices, Forrester noted.

Apple claims about 100,000 custom-built iPad apps, while Google's Honeycomb platform, which is the tablet version of the Android operating system, has attracted fewer than 300 apps, according to Forrester.

"If Amazon's Android-based tablet sells in the millions, Android will suddenly appear much more attractive to developers who have taken a wait-and-see approach," Epps said.

Amazon's Kindle e-reader is lighter and smaller than the iPad, but Apple's tablet has a browser and other services for enhanced reading and researching, Fred Wilson, a venture capital investor and principal at Union Square Ventures, said in a recent blog.

"What we all want is a hybrid of the two -- a Kindle that is a full-blown tablet computer with a browser, apps, and an OS," Wilson added. "It looks like Amazon is going to bring that to market this fall ... It looks like a killer product."

Amazon shares were up 3.4 percent at $206.03 in afternoon trading on Monday, leaving them up more than 10 percent so far this year.

Apple shares were up 1.6 percent at $389.87. The stock is up almost 19 percent so far in 2011.

(Reporting by Alistair Barr; Editing by Tim Dobbyn and Matthew Lewis)

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(AP) - Peter Neronha, U.S. attorney for the district of Rhode Island, announces a $500 million settlement with Internet giant Google over Canadian drug advertisements Wednesday, Aug. 24, 2011, in Providence, R.I. The agreement settles a federal investigation into Google's distribution of online ads from Canadian pharmacies that were illegally selling prescription and non-prescription drugs to American consumers. (AP Photo/Joe Giblin)

(Reuters) - One of the business sites of Internet search engine Google Inc is shown on a computer screen in Encinitas, California in this April 13, 2010 file photo. REUTERS/Mike Blake

(AP) - In this May 6, 2011 photo provided by Andrea Boettcher, Ashley and Beau Broering dance at their wedding reception in suburban Cincinnati, as AshleyaAAs mother, Patty Davisson, watches via Skype from her Cincinnati hospital room by way of a computer screen. Ashley Broering, 26, knew her cancer-stricken mother was too ill to attend the wedding in person, so she decided to let her mother view the wedding and reception using Skype, a software program that allows person-to-person video and audio over the Internet. Davisson, 54, died May 24. (AP Photo/Andrea Boettcher)

Google Chairman Eric Schmidt smiles during a rehearsal of his MacTaggart lecture speech for the Edinburgh International Television Festival in Edinburgh, Scotland August 26, 2011.

Credit: Reuters/David Moir

EDINBURGH, Scotland (Reuters) - Google is "absolutely committed" to its fledgling television business and expects many more partners to join it soon, Executive Chairman Eric Schmidt said on Saturday.

Google TV, which allows viewers to mix Web and television content on TV screens via a browser, has received lukewarm reviews and been blocked by the major U.S. networks since its launch in the United States in October.

Schmidt told the Edinburgh television festival its lack of success so far was partly because it was a feature designed into televisions, devices which consumers tend to replace only about once every five years.

"We're absolutely committed to staying, to improving Google TV," he said, adding that new companies would be joining existing partners Sony and Logitech for the next version. Logitech makes computer mice, speakers, webcams and keyboards.

"I believe that they're both going to be on board and I believe there are many more coming. Wait shortly for an announcement," he said.

Google has long harbored ambitions to extend its $28 billion online advertising business to the television arena, where the lion's share of global ad budgets is spent.

It owns YouTube, the world's most popular online video site, but has not announced any profits from that business since buying it in 2006.

Schmidt said in a keynote speech on Friday that he expected Google TV to launch in Europe early next year.

On Saturday, he said Google had not yet resolved its differences with U.S. networks ABC, NBC and CBS, and hoped the company would not encounter similar problems for its British launch.

"We certainly have talked to them about reversing their position and we certainly hope that won't happen here," he said, adding that Google was in talks with UK broadcasters.

Like other industries disrupted by the Internet, the television industry is broadly suspicious of Google, fearing the company will steal its advertising revenues without contributing toward the high costs of programing.

Google argues that the Internet can expand the total advertising market by providing better-targeted and more effective ads that will encourage companies to spend more.

KNOWLEDGE SHARING

Google could glean valuable insights into U.S. viewing habits from the $12.5 billion acquisition of Motorola Mobility, which it announced last week.

Motorola owns the world's largest set top box business and has close relationships with U.S. cable companies -- who have expressed concern about the acquisition.

Schmidt said he could not talk in detail about Google's plans for that business until the merger was completed, but said there were "interesting ideas" about how it could help Google's existing television business.

"We're intending to run Motorola, which would include the set top box business, as a completely separate business. That does not mean that there won't be communication between the two, and obviously sharing and knowledge sharing," he said.

Schmidt also said British Prime Minister David Cameron would be making a mistake if he tried to shut down online communications during periods of social unrest.

Cameron had asked authorities to look at the possibility of such measures in the wake of riots that tore through England earlier this month and were partly organized on Research in Motion's BlackBerry Messenger, Twitter and Facebook.

Such moves have been widely condemned as repressive when used by other countries, especially during the Arab Spring uprisings in North Africa and the Middle East.

"I think it's a mistake. I hope that's a clear answer," Schmidt said. "Whatever the problem was, which I don't really understand... the Internet was a reflection of that problem but turning the Internet on and off is not going to fix it."

(Reporting by Georgina Prodhan; editing by Keiron Henderson)

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