Amazon has just announced the Kindle Fire. You won't be able to get your hands on one until November 15th, but you can order one now. If Apple was planning to release an upgraded iPad before the holidays, Amazon just stole all of Apple's thunder.
The Kindle Fire gets rid of the ridiculous chiclet keyboard, adds a color display, and sells for just $199. Can you spell "Christmas present?" The low price is surely going to steal market share from the iPad, as the Fire offers books, magazines, movies, TV shows, Web browsing, email, and some games. Unlike some of the earlier Kindles, this is a WiFi only device, which is not likely to be an issue for most people. You can download your books, videos, and magazines at home, and then read them while you are away from a wireless network.
Amazon also offers free cloud storage for everything you buy. This is another place where Amazon has gotten the jump on Apple. Apple's cloud service is still in beta, and so it is hard to evaluate what it means for the average Apple user.
This will likely force Apple to lower prices on the iPad. The iPad is a much more capable device, but the Kindle Fire is going to be judged as "good enough" by millions. Amazon has a winner. The only thing that could hurt sales is if the early units have technical or usability problems--remember the roll out of the Apple Newton? The Newton was widely ridiculed for some early software issues, which were quickly corrected, but the bad PR sunk the device and it never really recovered.