Also, the only real improvement I see over B&Ns Nook is the dual quad processor. Otherwise the Nook has better support of various file types and more options to buy.
You apparently misunderstand something about the Fire.....it's a full fledged tablet out of the box, not just a fancy reader like the Nook Color. It's got built in access to download apps(re: games), surf the net and everything else an Android tablet can do with full access to all content available from Amazon on top of that. People wanting an inexpensive tablet that may never use it to read with now have a viable, name brand option to get into the Tablet market.
The Nook does
not have better support out of the box, it has
less support out of the box for functionality as the Nook Color is
only a reader unless you root-kit it, which most people are not willing/are able to do.
My wife and I own a Nook Color (and Nook touch) and this Fire is waaaaaaay cooler than the Nook Color. Not only is Amazon now competing with B & N, at this price point and with the full fledged tablet functionality, it's beating the crap out of them until the Nook Color 2 comes out down the road. Right now, Fire wins no contest.