The problem with going up against Google is that they offer a superior product to end-users for free. I have no doubt that the iPad will remain a superior product to the Amazon Tablet. However, I also have no doubt it will keep costing more than the Amazon tablet. Consumers care about that extra ~$250.

Like Google, the iPad is currently the low-end and the high-end of the market, but unlike Google, it's vulnerable on the low-end. That's where Amazon will attack it and with ~100 million customers, their credit card numbers ready to go, good brand-loyalty, a huge content store, and so much experience in on-line/cloud services that even Apple uses them, they'll likely have quite a bit of success.