If $100 Android tablets and the $200 Nook Color didn't destroy the market for the Fire, then the Fire isn't going to destroy the market for others that come after it.
Amazon isn't out to conquer the tablet market, any more than those newspapers who give tablets away free to longterm online subscribers.
Amazon's sole aim is to get more buyers of their services. Profit on the device sale itself is not the primary motive, unlike with Apple and other tablet sellers.
B&N is very similar, in that they don't really care how many Nooks they sell, as long as anyone who doesn't get one, does use their Nook app.
But Amazon is a completely different animal. The Kindle was a BIG selling product. Much more than the Nook.
They have already a distribution channel which is superior to many companies, they have built a great name to themselves in terms of costumer service, and above all, they have taken their time to come out with a tablet.
They first released the Kindle. It was a big hit. They continued evolving it and the consumers kept buying it. At this point, they were far from the tablet market, it was just a reading device.
Then they released their cloud service. Which, in my opinion, is superior to what Apple did with MobileMe. Let's accept it, they beat Apple at being the first in offering cloud services which are actually good enough to use. We are about to see how iCloud works, but even if it works OK, Amazon was there first.
And now they are releasing a tablet, which even tho it runs Android, I think it is very different from other tablets out there. This is the first real tablet out there which seems to be a "trend topic" because it is from Amazon, and the Android part is not even mentioned much. I wouldn't be surprised the majority of people don't even know Android is in there.
Time will tell if the user experience is good, but aside from the Samsung Galaxy, I haven't seen any other tablet get so much media coverage as the Kindle Fire. Except the iPad, of course. And the Galaxy has received media coverage because of its legal disputes with Apple, not because of the device itself.
Many times it has been said Apple is big because of the content. Samsung, Sony, Microsoft, etc. might come out with interesting ideas of tablets, but they don't have content. Amazon has content. They have music, books, movies, TV shows, magazines, etc. For the movies studios or the music studios, Amazon kind of seems like the ideal company to make a counterpart to Apple.
For the time Amazon has been in the hardware development section, I think they have done incredible things. To a lower scale, they did to the book industry what Apple did to the music industry. Since owning a Kindle, the amount of book I read has increased.
Don't get me wrong, I love my iPad. And I know I will always prefer it to any other tablet. I'm an Apple Fan. But I also own a Kindle, and use Amazon.com frequently. And I think Amazon could be the company which eventually grows out to be another story of success just like Apple is.