Remember last year when Amazon unveiled the Kindle Fire at $199 and everyone expected it to sell like hotcakes? Well it was quite successful actually, but I think it could have been more successful if it wasn't a forked version of Android. Either way it was a game changer because they changed the pricing model forever and for the better. Google wanted to make a splash with the Nexus 7 and boy did they. Priced the same as the Kindle Fire with way better specs, the Nexus 7 has to have Amazon a little nervous.
Well it's not only Amazon that's nervous because one Cowen analyst is thinking the same thing. Kevin Kopelman just cut his forecast for Amazon's revenue as well as sales of the Kindle Fire and Kinde e-reader. He originally expected Amazon to sell 14 million Kindle Fire's, but is thinking it will be more like 12 million.
This drop is due to the early success of the Nexus 7 and let's not forget that Apple probably has an iPad Mini up its sleeve. Of course Amazon has another tablet or two to launch later this year, but since they can't offer a full Android experience, the only way they will be able to compete now is solely on price. Who knows, maybe the next 7-inch model will sell for $99. Amazon still has a name and a lot of mainstream consumers will buy it based on that, but I think their upside is limited.
source: cnet
Amazon is not beyond starting a price war. Look for software improvements to the whole line and a price drop on the original Fire when they announce their new tablets. This could be a lot of fun for consumers.