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Amazon.com Inc. (AMZN - Analyst Report) has announced its acquisition of the color display unit, Liquavista NV from Samsung Electronics Co. for an undisclosed sum.

Founded in 2006, Liquavista NV was a part of Koninklijke Philips Electronics NV, which was acquired by Samsung in Dec, 2010. With the help of Texas Instruments (TXN - Analyst Report), Liquavista has developed processors that can be used in media player and e-reader displays. Liquavista’s flagship “electrowetting” technology is a new display technology that enhances the clarity of the color display without consuming a lot of power, irrespective of the lighting condition. Since battery life is a major concern for all mobile Internet device (MID) manufacturers, Amazon is very interested in this technology.

The acquisition comes at a good time for Amazon as the launch of its next line of Kindle Fires is still likely a few months away. Electrowetting, if incorporated in the next version of its tablets, would be particularly useful for reading children’s books and graphic novels as these deplete battery lives faster. In each version of its earlier tablets, Amazon has added improvements and upgrades. So it is very likely that this time will be no different.

Despite its strong growth in the last few years, sales of Amazon’s Kindle Fire tablet are still well behind Apple Inc.’s (AAPL - Analyst Report) iPads and Samsung’s Galaxy series. They also slightly lag Google’s Nexus line of tablets.

As a result, IDC estimates that Apple continues to lead the market with a 39.6% share followed by Samsung at 17.9%, ASUS at 5.5% and Amazon’s Kindle Fire at 3.7%. However, unlike the other players, Amazon is primarily a retailer, so its focus is more on selling goods. Therefore, the importance of its Kindle tablet is as a platform for these sales.

Amazon is one of the leading players in the extremely fast-growing retail e-commerce market. While the strong growth prospects are making the market more competitive by the day, Amazon continues to maintain and even grow its share on the back of its consistent and reliable service. Amazon’s scale of offerings, its broad reach and platform approach are the keys to its success.

In the first quarter of fiscal 2013, Amazon reported revenues of $16.07 billion, down 24.4% sequentially and up 21.9% from the year-ago quarter. This was in line with the guidance for the quarter of $15.0-16.6 billion (down 25.7% sequentially, or up 19.8% year over year at the mid-point), although missing our expectations by a sliver. Year-over-year revenue growth was 24% excluding unfavorable currency impact.

Amazon has a Zacks Rank #3 (Hold).

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