The report cites the usual people familiar with the matter as the confirmation for an October launch of an Amazon Android tablet. The screen size will be in the region of nine inches and it won't have a camera.
The first version of this tablet won't be designed by Amazon, it's alleged, but a subsequent one will. This implied the first one will be a generic, entry-level, white-label one with an Amazon logo and maybe some bespoke software on it. The WSJ has followed SEO best-practice by banging on about the iPad, but that's unlikely to be the target market.
Amazon is an e-tailer and devices like the Kindle exist primarily to boost promote the purchase of goods from Amazon, such as e-books. The story also speculates that Amazon is fretting about cannibalising Kindle sales with the new tablet, but Amazon probably doesn't care as long as people are being encouraged to buy stuff from it.
So the Android tablet will probably be optimised towards the Amazon app store, and the sale of Amazon cloud services. It will thus be priced as low as possible, with Amazon possibly taking a loss on each one, with the aim of kick-starting Amazon's app/cloud products.
As TechCrunch points out, this makes the presumed Amazon tablet much more of a threat to Android incumbents than to the iPad. Apple's tablet has such a head-start on the rest, and is so competitively priced, that it's very difficult to compete with it on hardware.
But there could be a market for a tablet that is geared primarily towards e-commerce, and it wouldn't even be a surprise to see Amazon giving them away with large purchases, or as part of other incentives. A big installed-base of these tablets will be what Amazon is aiming for, and we expect to see it try some novel tactics to achieve this.