When it was announced, the Fire succeeded in one thing. Amazon presented a world with a $200 dollar Tablet that didn't suck. (Not to mention, during X-Mas) Before it, decent tablets from Samsung and HTC were priced higher than the iPad. Other's that weren't priced so high were from companies like Augen or Archos (didn't their's have resistive touchscreens?).
That price point was 99.9% the reason it succeeded. And now that Google has met that with a package that includes real tablet OS functionality...things like Gmail, Google Calendar, maps, navigation, and new features like Google Now and better Search, I don't think Amazon stands a chance.
I know some will argue that Amazon presents a better media ecosystem, but I disagree. Google Play offers decent content, and there are always third party content providers like Netflix, Hulu, and even Amazon Kindle Books. In terms of just movies and TV shows, I felt that Prime (when I tried it a couple of months ago) severally lacked in decent content. It certainly wasn't better than what Netflix or Hulu already offered.
I appreciate what Amazon has done so far. They are a big reason why Tablet apps for Android have started to get better. And if they didn't make the Fire $200, this Nexus 7 device would not exist.
But going forward, I simply don't see a future for it. Maybe they could cut the price more. But I doubt the economics of that kind of move would be feasible. Eventually, the Kindle Fire will have to find a way to exist as an iOS, Android, and W8 app.
(oh and same thing applies for Nook...although that thing was always a bit DOA in my opinion)