Amazon announced the second iteration of it's popular Kindle Fire today. With screens sizes from 7" up to 8.9" and prices ranging from $159 to $499, it's an impressive lineup. No single manufacturer has been able to make any kind of run at Apple in the tablet market since the iPad was introduced. Most companies have failed by attempting to create an iPad replica. The result has been tablets with inferior experiences at very similar prices.
Amazon, by the nature of who they are, doesn't need to play the same game as the wannabes. They've chosen, very wisely in my opinion, to do things differently. Because they make their money by selling content, they don't need to make any money at all on devices. This means nobody will be able to touch their prices. At the same time, they've got more content to fill their devices than anyone not named Apple.
Amazon is trailing Apple significantly in both quantity and quality of apps and global distribution.
Amazon is attempting to limit the significance of the app deficit by essentially marketing apps not as a primary use case for a tablet, but rather as a less important side benefit. It's a bold move and it will work for many people. If you want to listen to music, watch video, surf the web and check your email, the Fire is a competent device.
Amazon has much work to do on the global distribution front. Short term, it may be their largest barrier to success. The current situation is that if you don't live in the US or Great Britain, a Fire will do you little good. Amazon has no way to sell you the content that makes the device so compelling. If they can make progress in the coming years, the sky may be the limit.
I can envision a time in a couple years where both Apple and Amazon are successful in selling a lot of tablets that cater to their uniques strengths. I'm sure Apple is paying close attention.