I've said this before, and I'll say this again - Amazon is on Fire! But I never realized that they literally were riding 'on Fire'. The world's largest online retailer unveiled its much talked about under-$200 tablet earlier this week - Kindle Fire. A device that has a screen size small enough (7-inch display) for it to fit comfortably in your hands, and at a price tag less than half of Apple's cheapest iPad ($499), it is clear that Amazon has Apple in Fire's crosshairs.

Fire is more or less a bumped up version of the Kindle e-book reader, packed with features and runs on Android. The way I see it, Amazon will be able to leverage its dominance in the e-commerce space to ramp up the sale of Fire, and give a real challenge to the iPad with its attractive price tag, and feature-rich product.

Some may be skeptical about the success of Kindle Fire, now that tablets from other rivals like HP and RIM have crashed and burned, but they did not have what has always been Amazon's stronghold - deep penetration among the consumers, and their trust in the services of Amazon. As far as the lower profit margins are concerned, I think that will be well complemented with the sales of Amazon's e-books, movies and music on the device. After all, Amazon has just redesigned their whole website to further enrichen the user experience on tablets - a strategic move.

Although the device does not have an embedded camera or a microphone, the device offers Wi-Fi connectivity. But one important aspect I feel missing in a feature rich product is its lack of 3G-access. Amazon is also trying to give a boost to Amazon Prime - the company's $79-a-year video streaming subscription service, that is being offered as a 30-day free trial with the Kindle Fire.

With the tablet market witnessing an annual growth of 51% and still dominated by Apple's iPad, initial consumer reaction to Kindle Fire will play a critical role in determining whether Amazon will be able to cash-in on this product, or whether it will prove to be a disappointment. I, for one, am hopeful.