Apparently, Amazon is working hard to increase the supply of their upcoming Kindle Fire tablet, because the demand has more than exceeded their expectations. If I remember correctly they were expecting about 4 million units to be sold if it was launched in August, as originally planned, and then the 2 million figure was around, when they planned it for November. But now, new calculations show that Amazon might be able to sell 5 million of them, in November and December alone.
That doesn't seem like it can beat the iPad numbers yet, but it's a far cry from the iPad's original launch, when they only sold 2 million in first 2 months. If Amazon can keep this up, they might be able to outsell the iPad by the time they launch their second gen Kindle Fire.
Apple has gotten a strong foothold in the tablet market, but they are not invincible. Regular Android tablets are already starting to chip away at the iPad's market share, and we haven't even seen the 2nd gen Kal-El and Android 4.0 tablets. Not to mention the Transformer Prime superstar, which I think will become the most popular single Android tablet/hybrid besides the Kindle Fire.
I'm leaning more towards a $500 powerful machine like the Asus Transformer Prime, with the latest version of Android, but I think there are a lot of people out there who just want a well made, but casual tablet. It's unfortunate that Android manufacturers like Samsung and Motorola haven't already thought about making a $200 tablet, or at least a $250 one with similar specs if they can't take the losses of Amazon. It's a lost opportunity, and it would've helped Android to rise in market share much faster.
The Kindle Fire is based on Android 2.3, but it's kind of a whole other ecosystem. Unless you root it, you won't be able to use other apps from the ones provided in the Amazon App Store. My guess is many normal people who like Android will buy this tablet because of Amazon's branding and of course, because of the low price. For now they won't have much competition, and it will help them gain precious market share from iPad, too, or at the very least slow down its growth, while expanding the overall tablet market. Next year is set up to be a very interesting year, with all these platforms fighting against each other more fierce than ever.