As much as I was attracted to the Kindle Fire when it was first announced, I continue to be stunned by the projected sales numbers. It is estimated by some accounts that six million units will be in the hands of users by the end of 2011.
This could be somewhat of a risk to the iPad if only in one regard. The Kindle Fire doesn't try to do too much. They took the most common features that people look for in a table, and packaged it into a small form factor that is large enough to be usage, and small enough to be portable. Most people do not need or want a fully functional tablet. According to studies, the most common things people want to do on this form factor is read books, browse the Internet, email, watch videos, and mild gaming. Amazon was able to do this while still keeping the price very affordable.
There has been some questions over whether or not Amazon is making any money on the product, but they are thinking long term. Even if they sell at a loss, Amazon knows that people are going to buy media to consume on the product, and long term it will be more profitable than their traditional channels. No warehouse space needed for the media, just some computer files. Think about how cool it will be to carry entertainment for a trip in your pocket or purse.