The new Amazon model will put great pressure on the prices of Android-based tablets from other makers, meaning that Samsung, Motorola and others will be forced to lower their prices to something at least in striking distance of theKindle Fire's announced $199 price. The market pressure to lower prices will only increase when Barnes & Noble starts selling the Color Nook 2 at the $250 price point.
By Christmas 2011, you should be able to buy a nice Android tablet from a number of manufacturers for around that price. Overall, this is a good thing. On one hand, it will bring tablets into the hands of a much larger market, and applications for tablet devices will grow accordingly. On the other hand, it may be the coup de grace for the netbook market, finally bringing an end to those dreadful devices.
What it won't do is threaten the iPad. In fact, the new inexpensive tablets might actually help iPad sales a little as tablets become a more legitimate platform. The iPad is popular because it's an iPad, pure and simple. People buy it because of the wealth of applications available for the platform-for the user interface and because it's both easy and comfortable to use.
This isn't to suggest that the Kindle Fire (or the Nook Color 2 for that matter) won't be easy and comfortable to use. Both are intended to be used by people who primarily want e-readers, and their Android innards are disguised by custom software and interfaces. They are, first and foremost, something for people who aren't Android fans, but rather people who want more than the gray e-ink devices that have been offered as e-readers previously.
What customers will be getting from Amazon will be something with the physical appearance of a BlackBerry Playbook (it's virtually the same hardware), but that looks different when you use it. It will have the Kindle e-reader, of course, and it'll have a Web browser. Right now I don't know what else will come with the Kindle Fire, although the word in the blogosphere is that it won't have an email client, but that one will be available for download.
The release of the two Android e-reader/tablets will shake up the Android tablet market. While Motorola and Samsung may be able to get away with charging more for tablets with 10-inch screens, the universe of 7-inch tablets will be changed.