3. Apple shipped 17 million iPads last quarter. That tells me holiday 10" iPad demand alone could easily hit 25 million units. How much might Apple expand the market with an 8" iPad? And how much of the total market share will Amazon be prepared to poach with the 9" Fire HD? I'd be impressed if Amazon can deliver 5 million 9" HD units (especially given that Amazon only managed about 5 million of the original Fire, and now there are three different models). It's just really hard to quickly ramp up volumes of any brand new device.
4. Amazon has content galore, and great services for the Kindle lineup. But a weak spot? Apps. It will take time for developers to build apps that specifically take advantage of the Fire's new 9" HD display, and I'd argue they can't start to do a really great job until the software is final and shipping. Even then, some will hold off to see what Android tablet sells better, Google's Nexus 7 or Amazon's 9" HD.
So Apple still has a bit of an advantage heading into the holiday season. And then in March and April of 2013 we can expect to see yet another new iPad.
Jeff Bezos has thrown down the gauntlet in front of Apple in convincing fashion, even challenging Apple's penchant for turning big profits on device sales. Expect the folks at Apple to take it personally.
If Apple responds with smaller, more affordable iPads that strike a chord with consumers, an impressive new iPod lineup, and a fresh approach to online services that finally seems on par with its meticulous design chops, it might beat back this challenge from Amazon. If not? Then in 2013 we may be talking about how much Amazon is hurting Apple.