I was reading Shawn Blanc tonight and his speculation on the unannounced Kindle tablet:
If Amazon is going to make an inexpensive device that is backed by their brand and ecosystem, then why not make a better Kindle rather than a crappy tablet? Is the Kindle market saturated? Are they trying to increase the perceived value of the Kindle by making a secondary, more expensive device?
I think Sean's on track with most of his speculation and guesswork. I agree that there probably is a market for a better Kindle, rather than some sort of featured-creeped faux tablet. I bought a Kindle a few months ago and as a reading device, it's a much better experience in most environment's than the iPad. That said, I just don't see how anyone can make a 'better' or similarly featured iPad-like device for less money than Apple. The economies of scale seem to heavily weighted to Apple's advantage.