The ink has barely dried on the new production Amazon Kindle 2 e-readers and now there's a hot rumor surfacing about the Kindle 3. Among the speculation is one interesting suggestion: The Kindle version 3 may actually arrive on the shelves before Christmas.

The Kindle 2 is an improvement on the Kindle 1, of course--it has faster screen processing tech nestled inside, its overall design has been cleaned up, and there's the interesting, if controversial, text-to-speech function. But there are still criticisms: The screen is still relatively tiny, there's no touch-screen function and stylistically it's still somewhat of a mess with about 30% of its top surface dedicated not to its primary function as an e-book visualizer, but for a keyboard.

So it's no surprise that the rumors from an (of course) unidentified contact inside Amazon point to the Kindle 3 solving many of these issues. The new device would be larger in size and have a touch-screen, and debut "by the end of this year." That's it for details, though Digitimes, where the rumors have surfaced, is a pretty reputable source. 

The increased size screen with touch-control is a no-brainer--Kindle rivals Plastic Logic has been aggressively pushing its upcoming innovative flexible-screen e-reader for months (pictured with the Kindle 1 above.) It's got a notepaper-sized screen, better for viewing magazine and newspaper-style content, and touchscreen input for note-taking, page annotation and so on. And Fujitsu's already trialling a large full-color e-book of its own. If the Kindle 3 didn't follow these trends then it'd run the risk of being a failing device even with the Amazon eco-system to drive the text content.

A far more interesting trick would be for the Kindle 3 to go worldwide. It's supposedly been selling well, but is limited to the U.S. If Amazon followed Apple's model, whereby the iPhone 1 was only in the U.S. at first, and then version 2 was distributed across the globe, then the potential for success would be dramatically improved. Indeed a tear-down of the Kindle 2 has revealed a space for a SIM card, and that would allow foreign Kindles to access broadband Internet to download e-books on a country-by-country basis, versus the tied-in but free Whispernet service the American version employs. The SIM slot isn't exploited now, so its unclear if it's a design lay-over, a hint that a Kindle 2.1 may go worldwide, or a suspended piece of thinking until the Kindle 3 is out.

The Kindle 3 is just a rumor, of course, but watch this space--Amazon's clearly working on some new tech, and the good money is on news of a new device sometime this year.

[Digitimes via Mobileread] 

Read more Fast Company stories about the Kindle, here, and The Fast Company 50: #9 Amazon.