I own a tablet (Motorola XOOM) and have used an iPad on a couple of occasions. Those tablets are pitched as substitutes for the PC, suggesting that you might produce content using them. (Apples early release of an office suite for iPad is further evidence of this focus.)

However, so far, I've really only found tablets useful for content consumption. The Kindle Fire makes the bold (and I think right) choice to optimize for consumption. I suspect its smaller form factor will appeal to how more people will actually use these things. Similarly, I don't think people really want high-quality cameras or video on their tablets.

The Kindle Fire is exactly the right product for Amazon to release (given their strengths), and I suspect it might be match the needs of a larger group of people than the iPad.

However, content production in tablets will surely improve over time and I don't think iPad/Windows 8/Android are misguided. I'm just betting that Amazon latched on to a real hole in the market that can be profitable right now.