My Motorola Atrix phone is similar and uses the .../mnt/sdcard folder in internal storage as an SD card and the actual SD card is /mnt/sdcardext. Or at least something similar to that. My Atrix runs Gingerbread which is what the KFire will be running.

As far as prices, don't forget that Apple sold their original iPods at the typically high Apple price. So why did they succeed in sales and eventually take over the MP3 player market? Logic at the time suggested that would be too high and consumers would turn up their noses at iPods. However, Apple provided a turnkey solution by making it super simple and mindless to get music on your iPod for a great price because Apple had already put the iTunes store in place. Likewise Amazon has its stores for multi-media and eBooks well established and in place. Couple that with a $200 KFire and I really don't see the NC2 as able to compete with that complete Amazon system. B&N simply does not have the infrastructure in place to provide those multi-media services, nor do they have a good track record of turning out cutting edge firmware.