As a kindle fire owner I think Amazon could be beaten in the tablet market quite easily. It's a mediocre device though I don't think Amazon cares that much as it's clearly just designed to consume Amazon sold content.
It's a mediocre device, but that's the whole point of it. It's only 200 dollars. It's the cheapest and easiest way to consume Amazon content and that strategy will happily coexist with the iPad. (I think)
I believe it will co-exist with the iPad as well since it targets two different markets. I simply think another vendor with a slightly better device in that price range could beat amazon at their own game. Slightly better speakers and not using the poorly designed amazon app store would get me to pony up another $200.