Apple (Nasdaq: AAPL) sells a ton of iPhones, but it's a distant second to Android devices in terms of global smartphone popularity. Apple cranks out millions of Macs and MacBooks every quarter, but the tech giant isn't even one of the world's five largest PC makers in terms of unit sales.

The tablet market, on the other hand, is the one market Apple has truly cornered. Despite the proliferation of Android tablets with better specs or cheaper price points, the iPad reigns supreme. (Nasdaq: AMZN) probably had the best shot at crashing the tablet party when it rolled out the Kindle Fire last November. The $199 entry-level tablet sold "millions" -- probably nearly 5 million during the holiday quarter -- but it was no match for the 15.4 million iPad 2 tablets Apple sold that same quarter.

However, now CNET hears that Amazon may be rolling out the second generation of its Kindle Fire tablet as early as next month. Sources tell CNET that the leading online retailer is planning a July 31 launch event to unveil its new gadget.

Earlier this month, rumor-happy DigiTimes reported that the Kindle Fire 2 will have a higher resolution while maintaining the same $199 price point. Taking another page out of Apple's playbook, Amazon will then reportedly continue to sell the original Kindle Fire -- for which sales have reportedly slowed substantially this year -- at a lower price point.

If the original Kindle Fire drops to $149 -- and the Kindle Fire 2 does more than simply improve the graphics -- Amazon should be able to regain the momentum it seems to have squandered after a healthy start.

Amazon's move would not only help re-establish itself as this past holiday shopping season's silver medalist in tablets, but it would also position the e-tailer to compete against the onslaught of Microsoft (Nasdaq: MSFT) Surface tablets that will roll out later this year.

Amazon's ecosystem -- offering healthy digital marketplaces and the Amazon Prime program that offers streaming videos and monthly Kindle e-book rentals at no additional charge -- is strong. Lower price points and a better tablet will make it stronger.

Will Amazon catch up to Apple? No way. Will it need to try to catch up to Apple just so it's properly positioned to take on Microsoft and the next wave of Android tablets? You bet.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.