I think this could actually be the first tablet that might have a chance of challenging the iPad. The hardware+OS quality is important, but I dare say that the integration with a healthy apps and media ecosystem is just as important, and that is where Amazon could really shine:
As it stands, this is basically just an Android tablet, capable of downloading and listening to music, downloading and watching films, and reading books (and not as well as a true Kindle at that, given that it's a LCD screen..!!)
The excellent tie-in with for-purchase or for-rent media is one of the big things that make the iPad so interesting. You only need to enter your Apple ID and you're set. Amazon could do the same thing with their huge MP3, video and books library. You won't have to download any apps that might be not so well-integrated, you won't have to set up several different accounts (and subscriptions): just enter your Amazon login and all that media is right there, with the option to stream or sync whatever you've purchased in the past.
So even if the third-party apps selection isn't that great (right now, Android's biggest weakness), Amazon still has a cheap tablet meant for media consumption that ties in excellently with their services. This could be big.