Amazon has recently announced their first Tablet, the Kindle Fire. The tablet is rumored to run a highly customized version of Android 2.3. It is so highly customized that one may not even realize they are running an Android device. For reference here are the specs for the Kindle Fire put side by side with the Apple iPad 2.
As you can tell the iPad 2 clearly has more features than the Kindle Fire. It is missing features found on almost all tablets today such as a camera, accelerometer, and GPS. Yet it is still getting a huge amount of buzz in the tech world. There are two solid reasons why this is the case. First is the ultra low price point. No other tablet from a major brand has been able to get anything on the market this cheap. As a matter of fact iSuppli.com has reported that the Kindle Fire will cost $209.63 to make. Second is something that Amazon has done that no other tablet manufacturer has been able to pull off. They have created their own ecosystem. Amazon provides all the media you will need for your device. You will be able to get your music, books, movies and apps all directly from Amazon. This is how they are able to lose money on the tablets themselves because they know they will make the money back on content.
So who will purchase the Kindle Fire? First off this is not an iPad competitor. No one is going to drop their iPad to get a Kindle Fire. But this is not Amazon's intent. They are not trying to compete with the iPad. This will however be a great tablet for people who do not want to dish out the money for an iPad yet still want the tablet experience. The small form factor will also be a draw for some. Seven inches is much more portable than ten inches.
Other tablet manufacturers besides Apple may need to be worried. No other tablets have really been able to stand out in the iPad dominated tablet world. The Kindle Fire will kill what little sales they are currently getting.
A rumor is brewing about a ten inch version of the Kindle Fire to be released early next year. There is also a fair chance that it will have some of the features that the current Kindle Fire is missing.
So really what Amazon is selling is a product that's primary purpose is to allow customers to buy more Amazon products. I see the Kindle Fire being a huge success.