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If you want something to watch video, read ebooks and browse the Web, something that I know some tablet (including the the iPad) users to pretty much only use their devices for, then the Fire would be a pretty good choice.
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Except it can come down to something as simple as being the first established presence.
For instance I've known people who've bought iPods because they didn't know what an MP3 player was but they did know what an iPod was and what it did. I strongly suspect these will be the same people that buy an iPad and not a tablet.
So whilst the Fire might be a good choice at a much better price I suspect it will be more seen, by many people, as a colour Kindle rather than an iPad.
The iPhone is slightly different as people know what a phone is - it was an established technology long beforehand - so people understand that the iPhone is a mobile phone and that not all mobile phones are iPhones.