Amazon.com appears to be beefing up its Kindle development. The online retailer is reportedly acquiring a New York company called Touchco that specializes in touch screen technology — a feature widely expected to be part of future Kindle readers. The news follows an earlier report that Amazon nabbed Microsoft Windows executive Mike Nash for its Kindle team. Amazon is expanding its Kindle unit as Apple's new iPad threatens its hold over the emerging electronic book market.

The New York Times reports that Touchco's six-person team will join Amazon's Lab 126 unit in Cupertino, Calif., where the Kindle development team is based. The report says the firm's technology, called interpolating force-sensitive resistance (IFSR), can be used to make displays "that can be completely transparent and could cost as little as $10 a square foot" and "also detect an unlimited number of simultaneous touch points."

Analysts have predicted that future Kindles will have color and touch screen capability. Those kind of features have likely taken on new importance for Amazon given the unveiling of the new iPad tablet, which is color and touchscreen and performs a wide range of functions, including reading digital books.

I just checked Touchco's website, which is blank except for the message: "As of January 2010, the company is no longer doing business." A LinkedIn profile for the company describes its technology this way:

Unlike traditional capacitive sensors, our patent pending system can detect any object - not just a finger - and can determine how much pressure is being applied to every point on a sensor simultaneously. IFSR sensors are natively multi-touch, use less power than capacitive sensors, and are much less expensive to produce, making them a highly disruptive technology with widespread market applications.

The iPad is forcing a variety of changes for Amazon and its Kindle business. Apple's deal with publishers — letting them set higher retail prices for e-books — is forcing Amazon to follow suit. And Amazon is adopting Apple-like strategies for Kindle, including an app store.

Another sign of Amazon's development push with Kindle: There are 50 job positions listed on the Lab 126 website.

Update: Asked about the reported Touchco acquisition, Amazon spokeswoman Mary Osako said, "we don’t comment on rumors and speculation."

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