How will the Android OEMs react?

The first punch was the $199 Nexus 7. Then now, mere months later, Amazon upped the ante with 16GB Kindle fire HD for the same price. This is a huge blow for the other Android OEMs. I mean Samsung barely fought the iPad with their Galaxy Tab and Tab 2. Sony barely started. Motorola? Toshiba? And what about Acer? Will it "warn" Google and Amazon too like it warned Microsoft?

Seems like these hardware-only companies are losing. Amazon can play the race to the bottom because they have their services. It will be interesting how things go.