Forrester Research says could possibly sell up to 5 million tablet computers in the coming fourth quarter, making the already largest Internet retailer the biggest competition for Apple in what has become the consumer PC market’s fast-growing niche.

Amazon.com will need to price its tablet “substantially” under other competing products and have sufficient supply to meet demand, but if they can accomplish this they can “easily” sell between 3 to 5 million units in the final quarter of 2011, predicts Forrester’s Sarah Rotman Epps.

Since its initial launch in April 2010, Apple has sold almost 30 million iPads. Competing products from companies which include Samsung, RIM, and Motorola, have failed in seriously challenging Apple’s early lead. And this month HP scrapped its TouchPad after abysmal sales.

“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 iPad competitors have is, developers have so far been slow in creating apps for the devices, Forrester said.

Apple currently claims having approximately 100,000 custom-built apps for the iPad, while the tablet version of the Android operating system, Google’s Honeycomb platform, has attracted less than 300 apps, again 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 shares were up about 3 percent in Monday’s early afternoon trading,  putting them up more than 10 percent to date this year. Apple stock gained approximately 1.9 percent,  and is up nearly 19 percent in 2011.

(Via: Reuters)