All we know for certain is that Amazon (NASDAQ:AMZN) is hosting a press conference Wednesday. It’s in New York and starts at 10 a.m. EDT. But in the leaky-sieve that is the Internet, word has leaked out: Amazon is likely to announce a major upgrade to the Kindle, an iPad-like tablet being called the Kindle Fire.

But few investors seem to be willing to buy on the rumor. On Tuesday, a day when the Nasdaq Composite closed up 1.2%, Amazon closed down 2.5% at $224.21.

Perhaps it’s that investors simply don’t trust the speculation on tech blogs, which frequently contradict themselves with rumors of coming devices. Or conversely, perhaps it’s the very details of that speculation, such as the reports the Kindle Fire will be based on technology used in Research In Motion’s (NASDAQ:RIMM) Blackberry Playbook, an ill-starred tablet. Or that the Kindle being announced on Wednesday is simply a warm-up act for a much snazzier Kindle Fire to be revealed in early 2012.

If Amazon does unveil a Kindle Fire, the single most important data point among all the spin and pomp will be this: how much does it cost? Reports from tech sites and securities analysts alike suggest a price tag between $250 and $300. If that’s the case, the Fire could have an impact not only on Amazon shares, but on the stocks of other companies, too.

A $250 tablet from Amazon has a strong potential to be disruptive to the emerging tablets market. Many consumers are intrigued by iPads, but can’t bring themselves to spend $500 or more on one. In the same way as the original Kindle’s $139 price tag made the device a surprise best-seller, the Kindle Fire could bring tablets in to many more homes.

Apple (NASDAQ:AAPL) and Amazon have radically different approaches to tablets and content. Apple runs its iTunes online media store at a slim profit to sell more iPhones and iPads. It costs Apple an estimated $300 or so to sell an iPad, which it then retails for $499 or more. Apple makes hundreds of dollars per iPad, much of which goes to the bottom line.

Amazon is likely to sell its Kindle tablet at or near cost. The company has a long history of holding margins down by offering free stuff – free shipping, free streaming video (including TV shows and movies from News Corp.’s Fox unit) for Amazon Prime members. The idea isn’t to sell high-margin gadgets, as Apple does, but to get more people to buy more content.

So here’s what an Kindle Fire could mean for Amazon: a tablet that is an overnight success, but adds, little, if anything to profits. It’s not unimaginable that Amazon would sell tablets at a loss — to have a price point that brought in even more customers. Now throw in the costs of 11,000 TV shows and movies free for Prime members. Amazon could charge for those shows, like Netflix and iTunes do, but is forgoing that potential revenue.

In the short term, this could hurt Amazon’s profit margins. But in the longer term, it could bring in more customers to Prime and lead more Kindle Fire owners to buy other content, like movies and books, from Amazon’s site. That would mean longer-term revenue growth and a bigger share of markets in digital content.

If a Kindle tablet becomes a hot item, it could take some market share away from Apple — but not too much. Apple’s ability to raise the bar on tablet innovation will keep it at the high end of the market. Much worse off will be other makers of tablets running Android: Samsung and Motorola, especially. The market has room for two or three big tablet brands, and Amazon could easily become one of them, leaving less room for everyone else.

The reason Amazon can move so easily into the tablet space isn’t just the strong Kindle brand or a low price tag. One of the reasons tablets from RIM and Hewlett-Packard (NYSE:HPQ) simply didn’t sell was that they lacked the critical mass of content needed to make a tablet as compelling as the iPad.

Amazon is likely to pitch the Kindle Fire not as an all-in-one gadget like the iPad, but as a simple entertainment device with loads of free or cheap content — enough content to bring in a user base big enough to entice developers to write more apps for the Kindle Fire. At that point, the iPad may have its first serious competitor – and one selling at nearly half the price.