Amazon's recently announced Android tablet, the Kindle Fire, has already attracted a sizable audience judging by its pre-order rate, but the question of exactly what market Amazon is targeting with it has many analysts puzzled.

The main point of confusion tends to revolve around whether the Kindle Fire, set to release Nov. 15,  will compete with Apple's iPad 2, or whether its comparatively modest design will keep it in the color e-reader market.

However, the $199 price point, as well as the features and services Amazon is emphasizing suggest that the Kindle Fire will occupy a unique spot in the market and will not compete with other mobile devices.

Kindle Fire As A Tablet

Many are calling the Kindle Fire the first true contender for the iPad, and Amazon may very well be the only company able to compete with Apple, due to their formidable ecosystem of content and services.

But the 7-inch tablet lacks a number of features that customers making comparisons to the larger iPad 2 would expect, such as 3G, or a camera and microphone, meaning customers in the high-end tablet market will not find the Kindle Fire as appealing.

On the other hand, the explosion of sales that occurred when HP dropped the price of the TouchPad to $99 demonstrated a demand for cheap tablets, which is good news for Amazon.

Also, Amazon also seems intent on providing partnership with big-name apps, notably with one from streaming video competitor Netflix, so users expecting traditional tablet functionality should find what they want.

The app selection, though, will be limited to what Amazon approves through its own Android app store, according to TechCrunch, giving Amazon greater control over the user experience and allowing them to promote their own content.

While it may not have the same depth of hardware features as more expensive tablets, it is still a powerful device, as previews of the Kindle Fire's user experience seem mostly favorable, with outlets like Gizmodo praising the quick and intuitive user interface.

The integration of Amazon's new "split-browser," Silk, also lends the Kindle Fire extra speediness, as the usage of cloud-servers has reportedly produced a very fast browser without needing a lot of resources.

However, rumors coming out of Amazon suggest the company may be planning the Kindle Fire to be a precursor to a second, higher-end version of the tablet as early as January, leading to specualtion that this iteration is more of a stopgap release for the holidays.

Kindle Fire As An E-reader

Since the relatively small screen is more comparable to that of the Nook Color, Barnes and Noble's color e-reader, some outlets like PCMag think the Kindle Fire might be aimed at expanding the e-reader market, or at least will find more customers there.

Other analysts see the Kindle Fire as a chance for Amazon to expand its e-book audience as well, as added features like multimedia integration and cloud storage could attract new readers.

In an interview with Christian Science Monitor, Jonathan Taplin, director of the Annenberg Innovation Lab at the University of Southern California, said the Kindle Fire will be good news for e-book publishers.

From the Christian Science Monitor:

He recently published an “enhanced e-book,” called “Outlaw Blues,” with 100 videos. “These are the kinds of books that you couldn’t access on the old Kindle,” he points out, adding that this iteration of the e-reader opens the door to the next chapter in online publishing.

“This may seem like a small segment of the market at the moment,” he says, but it is coming next and it is coming fast. “Amazon is just positioning itself to be ready for that marketplace.” 

Kindle Fire, A New Niche

The Kindle Fire should certainly grow Amazon's existing e-reader user-base, but the device seems like more than simply a super-charged e-reader or even a traditonal tablet.

This is evident mostly in the way Amazon has focused the Kindle Fire to be a platform for content--like magazines, videos, and music--made specifically for the device itself.

Previews indicate the carousel interface is tightly focused on content with a heavy emphasis on books, music, and videos from Amazon's stores and cloud services.

The restriction to 8 GB of storage sould also keep users reliant on Amazon's cloud storage, which should help strenghten brand loyalty by tying people to the service where all their media is kept.

Amazon is promoting the Kindle Fire as a part of the larger Kindle lineup, suggesting they want to build that brand and ease consumers into to the idea of a tablet more gradually than with a more expensive product. 

Considering the focus on content Amazon seems to have created a device with a unique position and function to offer consumers a powerful but cheap product that does not really compete with any other mobile devices.

With the low price point, Amazon can offer consumers a way out of the dilemma of whether to sink their resources into a laptop, smartphone, or tablet – devices with overlapping functionality, but different applications.

The small, lightweight design could appeal to customers who want something even more portable than a traditional tablet, and the fast but not-overpowered performance would justify having a Kindle Fire in addition to a smartphone.

Amazon seems to be in a good position to attract customers who chose hold off on buying costly tablets but were still interested in the idea, which may turn out to be a significantly large group.