The big question will is: how long will the Kindle Fire last? That is to say, will this initial model still be the model sold in 6, 12, 24 months time? If Amazon can make people think of the Kindle Fire not as a piece of technology that is quickly out of date, but a bit of a premium device (albeit at a cut-rate price) that isn't going to feel old in a year, the economics will get much better over the product's life-cycle. Given that the specs on the device are pretty good (dual-core processor, display with IPS) yet nebulous (I haven't seen a stated resolution, processor clock speed, or RAM amount), it's possible that Amazon wants people to think of this as a product that won't change as quickly as, say, Android devices change. Amazon also has the option to exert a decent amount of control over the platform since they're doing both the hardware and the software and I think the Silk browser is part of that desire to move things that would be spec dependent off the device itself to ensure greater hardware longevity.
If Amazon is still selling this model 1-2 years from now, they'll be in a decent position. If people obsess over specs rather than wanting to buy into an "Amazon experience" or similar, less-spec-driven purchase process, then Amazon might not be in as good a place given the low to negative margins at release.
If Amazon is still selling this model 1-2 years from now, they'll be in a decent position. If people obsess over specs rather than wanting to buy into an "Amazon experience" or similar, less-spec-driven purchase process, then Amazon might not be in as good a place given the low to negative margins at release.