Its users still seem to see it as an e-reader with extra richness than as a tablet for general computing, however.
Kindle Fire splits tablet market into tabs and almost-tabs
Despite its success in the U.S., Kindle Fire hasn't taken off overseas. Part of the reason is price. Most of the reason is that, overseas, the Netflix, Hulu Plus, Amazon Prime and other streaming media services that make Kindle Fire a good media tablet even for non-e-book readers, aren't available.
Is that a problem?
Yes, if Amazon wants to take over the top tablet spot from Apple.
No, if you look at it from a customer's perspective.
Kindle Fire isn't competing for people who would otherwise buy an iPad. It's competing for people who want to read e-books, but don’t to waste time and money on a single-function device.
They're far happier to get something close to an iPad-quality machine for the cost of an e-reader; in making that choice, they expand and enrich the market for tablets – beyond the limited number who would pay $500 to $700 for something less capable than a laptop, while providing something very close in power to a laptop at the price of a decent Android phone.
The question isn't whether Kindle Fire will continue to lead the Android market.
The question is whether Nook will morph into a tablet that can compete with Fire, and whether Samsung, RIM, Lenovo, Acer and other tablet makers will take note of the Kindle Fire equation and try to offer their own iteration.
Given the historical inability of PC makers to squeeze premium features into smaller boxes at lower prices (doing it at the same or higher prices is a different market entirely), I doubt they'll be able to match the Fire any time soon.
Barnes & Noble could compete by beefing up the Nook. But it's already working at a deficit, trying to sell a less-capable machine in competition with a powerful one whose price is artificially low because the manufacturer subsidizes the cost in order to sell more books and other media.
In e-reader quality, accessibility and usability, Barnes & Noble might hope to compete with Amazon. It can't compete with Amazon's deep pockets and drive to make the Kindle Fire as inexpensive and easy to use as possible.
It also can't compete with Amazon's ability to sell a product that's neither fish nor fowl, while getting customers to appreciate a little something in between because it's better and cheaper than either a traditional e-reader or a full-scale tablet.
Unfortunately for makers of full-scale tablets, no one buys a tab for the power it packs.