Amazon's $199 tablet launched the company into the number-two spot for tablets. It appears to be a successful product. And it is. But that success can't last with Amazon's current business model.

The big draw for the , which Amazon achieved by selling at a loss. Every time someone buys a Kindle Fire, Amazon loses money -- somewhere between $10 and $70. The strategy is to get new and more active customers with the tablet, then make up the difference over time through Amazon.com sales. It's the same business model as printers, which are sold at a loss with the expectation of massive profits through the sale of ink cartridges.

The idea that Amazon and Google are competitors needs to be addressed.

Amazon appears to be a partner with Google as an Android hardware maker. But remember: Neither of these companies is in the hardware business. They are competitors in the digital content and online services business. That Amazon is shamelessly exploiting the software platform of its most direct competitor doesn't change the fact.

Here's the problem for Amazon. As prices come down, Google's partners will be able to sell tablets -- without losing money -- at or below Amazon's $199 price.