Amazon's primary interest in this device *seems* to be to drive sales on Amazon Instant, not to serve as a general purpose streamer like Roku (though it does that too). There's some confusion in the business press about what Amazon is up to, but this is a likely guess. It doesn't want to be reliant on Roku, ChromeCast, Sony, etc., and would like to have a sticky ecosystem like Apple.
The other theory is that Amazon believes users will prefer it as a premium branded product, again like Apple. The product does not need to compete with Roku on price, in that case, but does need to compete on features.