Amazon’s new Kindle Fire tablet has a long way to go to challenge the dominance of the iPad that apparently has a staggering 80% market share. But I think it is at least the first device that at least has a decent chance of both cutting into Apple’s market share and also further evolving the overall category.

As far as the reasons why the Fire could be the first serious contender, most people are pointing to the simple user interface the sits on top of the Android platform, the price point (at $199 less than half the iPad) and the power of Amazon’s brand and distribution.

But I think it’s much more than this and Bezos alluded to it when he talked about the new offering in terms of a ‘service’ rather than a ‘product’. Bezos understands that the true power and value to the user resides in the cloud and that therefore all devices have to be subservient to that. But I think that so far all the vendors, Apple included, have put the cart before the horse.

Apple is still in its heart a product company and just can’t quite make the leap to putting the cloud first and everything else second. Apple makes beautiful products with a fantastic user experience that customers absolutely love. But at the same time this is probably not the best way to really harness the power of the cloud and means that their products will always be on the expensive side. It also means that media companies and app developers have to give up allot of margin and conform to strict standards for the privilege of selling their services on Apple’s products. Your ticket into the ‘little kingdom’ will always come at a price.

Bezos gets this and the Fire is all about leveraging Amazon’s world-leading cloud infrastructure and content distribution platform; the product itself is secondary to that. In this way the device is really all about consuming media which means it can be stripped down to deliver on the very low price point. And Amazon is the largest distributor of digital and streaming media in the world so they can ensure that the product is really well integrated with these services.