"Even though Amazon taking on Apple is a bit like David taking on Goliath (compare the market cap, profits, and cash position of the two companies), Amazon's willingness to sell hardware at a loss--combined with the strength of its brand, content, cloud infrastructure, and commerce assets--makes it the only credible iPad competitor in the market," Epps writes.

Unlike Apple, which earns most of its income from hardware sales, Amazon isn't seeking a profit from hardware, Forrester says. The retailer could sell its slate as a loss leader, but still profit by directing its tablet users to Amazon services and software. This strategy would likely strain the already shaky Amazon/Apple relationship.

Other Android manufacturers may also overlay Amazon's software on their tablets to provide a "richer customer experience"--assuming, of course, the Amazon-oriented interface is superior to plain-vanilla Android or other OS skins.

If consumers flock to Amazon tablets, developers will soon follow. Retailers, banks, and media and software companies will quickly build apps for the Amazon slates, thereby reducing Apple's advantage in the apps race.