That quote that the Fire can do 80% of an iPad can do at 40% of the price is incorrect....
First off, the Fire costs $200, but if you want access to all that content you need an annual subscription to Amazon Prime at $79 per year. But even Bezos in an interview with Wired said that folks should also purchase an e-Ink Kindle because you want that for much of your reading. Let's break it down....
1) Movies: It is fun to watch movies on an iPad when you are traveling in the backseat of a car or an airplane or by loading up a bunch for vacation and playing them through the TV when you get there. With only 6GB
usable of local storage and no 3G, the Fire is going to be grounded at home and all that cloud-based service is going to seem ineffective here. Let's face it, at home folks watch movies on their TVs because the screens are much bigger than 7-inch.
2) Books: The cheaper Kindle's really shine as e-readers because of the e-Ink. The size of the fire may make it a tad more enjoyable for reading than the iPad, but the reviews seem to indicate a choppy experience for Kindle usage in 1.0.
3) Magazines: The Fire is a tad small for magazines (much pinch and zoom). The other downside is many electronic magazines take up a great deal of storage, so you can't have too many subscriptions on the go. Not to mention, without 3G those interactive embedded videos and such may be unavailable.
4) Music: Nobody cares about music on a tablet. This is a checkmark feature, but we have iPods and smartphones for that.
5) Games: Just like music, there are better solutions than a 7-inch tablet to run mobile games -- especially if you are not getting the graphics horsepower of an iPad. Any smartphone can run Angry Birds.
6) Couch Surfing: This is where the Fire
should do well. It sounds like the browser is a bit sluggish in the 1.0 release from the reviews, but one would hope that Amazon would work those things out.
So there you have it.... For $200 you can effectively do couch surfing and e-book reading. You can pay $79 more
per year for movies that you can only access on WiFi (and hotel room WiFi is usually insufficient).
Personally, I think the Fire will sell like crazy this Christmas at that price. But I think it will be similar to the economy Android tablets that sold well last Christmas. The buyers will likely be less-than-delighted with their new toy.
Once Fire gets a modified version of Ice Cream Sandwich it should be improved -- give it a revision or two.