Amazon will be able to get the job done if they try to compete on more than price. Once your proposition becomes "I'm the cheaper one" or "I'm a commodity," people start treating you like one, just like every other phone out there. There isn't one phone outselling the iPhone 4. Why? Because people don't believe that it's all about price.
Amazon has a great stable of products and content that other manufacturers don't have, but if people don't perceive them as premium at a value price, they'll be just another slip of glass that no one buys.
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Current Apple Stuff: 24" iMac, iPhone 4, AppleTV (original), 4gb Shuffle, 64gb iPad 2.
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