Amazon has reportedly acquired Touchco, a New York start-up that helps build touch-screen technology. According to the New York Times, Amazon has plans to fold Touchco into its Kindle hardware division. The acquisition indicates what Amazon might try to do next in response to Apple’s aggressive entry on the e-book reader market with the iPad announcement. Touchco’s technology makes the Kindle a full-color multi-touch Kindle that would directly compete with the iPad. Touchco’s multi-touch overlays are also fully flexible, which could allow the Kindle to be more rugged, without the need for a reinforced glass screen to protect the display’s components. Amazon is also preparing to introduce an app store for the Kindle, which won’t be any less restrictive than Apple’s, reports say.

The Times article quotes Colin Sebastian, an analyst at Lazard Capital to the effect that “The acquisition ‘would suggest Amazon is looking to expand its platform perhaps beyond e-readers to encompass more functionality and more content….It also could help them address some of the form-factor issues with the Kindle,” allowing it to, say, replace the physical keyboard with a virtual one.

Will just have to wait and see whether Amazon will be able to maintain a low price point for the Kindle ($259 currently) if it will pile on features to match the iPad.

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