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Amazon has no other choice than going more niche. Not everyone takes it for granted that ipad is the second coming of Jesus Christ and it will have no competition for a year or two.
Actually, Apple didn’t set the bar as high they could or did with the ipod. The high standards and expectations of the Android community will effectively push down price while demanding ipod like functionality.
I think we should be more curious how the Android community reacts than Amazon's inept response.
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