With its announcement of the Kindle Fire tablet on Wednesday, Amazon did something worthy of Apple: it invented a niche that it is likely to control, not directly competitive with anything currently on the market.

You will see endless discussion about how the Kindle Fire compares to the iPad, or whether the Kindle Fire is an “iPad killer.” Don’t worry about that. It misses the point.

First, make sure you have the details in mind. Here’s one of the 7 billion articles today about the Kindle Fire and Amazon’s other announcements. If you want more background, Bloomberg’s article recaps Amazon’s history and describes how the new Kindles fit into Amazon’s business plan.

Briefly: in November Amazon will begin shipping a 7” color tablet for $199 which is optimized for consuming things purchased from Amazon. It will display Kindle books beautifully, of course, but it will also stream movies from Amazon’s video service (which is slowly but surely building up a library of titles to be competitive with Netflix) and it will stream music that you’ve bought from Amazon or uploaded to Amazon’s cloud drive.

Amazon has also revamped the lineup of traditional e-ink Kindles with new touch screens and sharply lower prices.

A Kindle Fire with a 7” screen will be used for different things than an iPad with a 10” screen. Amazon will likely release a 10” Kindle Fire next year and the battle with Apple will be truly joined, but at the moment the two devices appeal to different audiences. The Kindle Fire is a much more limited device than the iPad. It won’t occur to you to create content on a Kindle Fire. No one will try to edit a Word document on it. There’s no camera and no microphone, and you can’t connect it to a computer so it won’t be easy to get your photos on it for a slideshow. You’ll use it to read books and magazines, browse web sites, and perhaps watch a movie. That’s it.

That’s the genius of it! There are many people who haven’t gotten an iPad because they’ve been put off by the high price and treasure simplicity; they find nothing appealing about the thought of hundreds of thousands of apps. Those are the people who will now buy a Kindle Fire instead. Here’s the way one article describes it:

As CEO Jeff Bezos said in a message to customers Wednesday, there are two approaches to the tablet market, and both can work. Apple has chosen one (feature-rich, powerful, high-end hardware tightly integrated with a formidable content ecosystem) and Amazon the other: (spartan, feature-limited hardware tightly integrated with a formidable content ecosystem).

With the launch of the Fire, Amazon has a good chance at splitting the tablet market in two and dominating its lower end.

Amazon decided to cut the price of the Kindle Fire far more aggressively than anyone expected. At $199, it is about a third of the cost of an iPad. It undercuts the price of the competing eBook readers and destroys the market for other tablets. At that price, the Kindle Fire is almost a gadget impulse buy rather than a fully considered laptop alternative. HP’s decision to exit the tablet business makes more sense now; don’t be surprised if Blackberry decides to bail out too. Where is the niche for anyone else? Google’s partners for Android tablets are smart competitors, and Microsoft will eventually enter the market, so it’s not like the game is over – but the game has been reshaped in a big way.

Apple is frequently described as pulling people into an “ecosystem” that ties its devices together with Apple’s iTunes store and the incredible variety of apps. The Kindle Fire leverages Amazon’s ecosystem brilliantly. If you’ve got any relationship with Amazon (who hasn’t?), the tablet gives you access to everything you’ve already committed to – your eBooks, the streaming video included with your Prime subscription – and then tempts you with seamless access to more. Worth noting: according to the ordering page, your new Kindle Fire will arrive already connected to your Amazon account, with your Kindle library waiting for you when you pull it out of the box. (It can be switched to a different account, of course.)

There is another piece of Amazon’s ecosystem that is put to use on the Kindle Fire. Amazon has developed a massive global network of servers used by corporations and cloud service providers for storage and online computing power. Now it’s going to put the EC2 cloud servers to use behind the scenes to speed up the Internet browser on the Kindle Fire. There’s an interesting look behind the scenes in the press release:

Modern websites have become complex. For example, on a recent day, constructing the CNN.com home page required 161 files served from 25 unique domains. This degree of complexity is common. In fact, a typical web page requires 80 files served from 13 different domains. Latency over wireless connections is high – on the order of 100 milliseconds round trip. Serving a web page requires hundreds of such round trips, only some of which can be done in parallel. In aggregate, this adds seconds to page load times.

Conversely, Amazon EC2 is always connected to the backbone of the internet where round-trip latency is 5 milliseconds or less to most web sites rather than the 100 milliseconds seen over wireless connections. In addition, EC2 servers have massive computational power. On EC2, available CPU, storage, and available memory can be orders of magnitudes larger than on mobile devices. Silk uses the power and speed of the EC2 server fleet to retrieve all of the components of a website and deliver them to Kindle Fire in a single, fast stream.

The technology behind the “Amazon Silk” browser won’t call attention to itself but the idea is that browsing on the Kindle Fire will feel faster than any other device you’ve ever used – faster, in fact, than browsing on your computer. Early reports are that it might work exactly as promised.

Although I love my iPad, I never fully joined the Apple ecosystem. I’ve never run iTunes or purchased a song from Apple. I’m fully plugged into Amazon, on the other hand – extensive Kindle library and lots of music in Amazon’s cloud drive. I put an order in for the Kindle Fire about an hour after the press conference started. It was a no-brainer. How about you? Ready for a new toy for the holidays?