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I have no doubt at all that Amazon planned the news release of the $164 Special Offer 3G to coincide with Barnes and Nobles press event. Jeff Bezos didn't get to where he is by being a clueless idiot.
As for what will Amazon do - they'll announce their rumored Android Tablet in the fall as competition for both Barnes and Apple.
I suspect the Kindle 4 is in the works and I believe it will be some sort of color eInk or similar type and I fear it will integrate a touch screen somehow as that seems to be what most people desire.
But as it, the Kindle line-up more than competes with the nook/nook color and the Amazon Website as the entire media solution music/books/movies far exceeds Barnes and Noble. In short, Amazon will continue to evolve, just like always.
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