iPad, anyone? I know they're not quite for the same purpose, particularly considering the advantages of eInk for a reading-only medium, but not to even mention it seems bizarre.
The device is going to struggle (I think Seth Godin's suggestion to reduce the price to cost is a good one) but the software is where they need to win in order to accomplish what Amazon really wants: a large market share in eBooks.
I don't think Amazon is going to drop the Kindle hardware anytime soon, purely because it's the only real way to get consumers locked in on the platform. Any other device has alternative reading applications, and switching is relatively easy.
Apple could have, in a sort of passive-aggressive manner, attacked Amazon by making the iBook application capable of plugging into arbitrary e-book marketplaces/readers. This provides consumers choice and convenience, while removing Amazon's control on the platform and leveling the playing field.
It may be unlikely, but all they have to do is to slow down the approval of them or create additional terms to the developer agreement.