Amazon, Microsoft Deal is Not Exactly a Marriage, But Could It Lead to a Baby Kindle?

The deal that Amazon struck with Microsoft yesterday was not solemnized in a courtroom, a church, or even in Vegas, but that doesn't mean we won't soon see the couple pushing a carriage with a cute and colorful little Kindle tablet model bundled up inside.

Neither party has disclosed the amount of the dowry paid by Amazon to Microsoft, but the deal means that each company now has a legal license to the other company's portfolio of patents, and Microsoft said specifically, according to Eric Engleman's report at TechFlash, that "the deal grants Amazon patent-related 'coverage' for its use of open-source and proprietary technologies in its Kindle e-reader, and for its use of Linux-based computer servers."   

Ho hum or big deal?

According to the Microsoft news release, "Microsoft has entered into similar agreements with other leading companies, including Apple Inc., HP, LG Electronics, Nikon Corp., Novell Inc., HOYA CORPORATION PENTAX Imaging Systems Division, Pioneer Corp., Samsung Electronics Co. Ltd. and Fuji Xerox Co. Ltd."

But that hasn't quieted the Wall Street buzz about the possibility that there might be a bun in the oven. Eric Savitz at Barrons.com's Tech Trader Daily reported last night that MKM Partners analyst Tim Boyd sees the imminent launch of a Kindle Pad in this otherwise inscrutable semaphore:

“The press release specifically mentioned that the agreement covers the Kindle – this means the entire Kindle franchise will now be able to leverage MSFT’s IP portfolio,” he writes in a brief e-mail. “We can draw only one conclusion from this: AMZN is going to build a ‘KindlePad.’ While the consensus view is that AMZN has already been working on a touch-screen, color Kindle with a higher level of Web browsing functionality, this announcement suggests that AMZN may go even farther and build a device that approaches the tablet PC level.”

 Boyd has set a price target of $200 for Amazon, which closed yesterday around $118 and has fallen 19% from its all-time high of $145.91 in December.