What's wrong with the cloud?
As I mentioned before, Apple makes an 8 GB iTouch. Has no micro SD slot. Does not have many returns.
Not so sure the Touch is a good example because Apple makes several models with more memory. They currently offer a 64GB version, for example.
Nothing wrong with the cloud. As long as you have access, that is. No access, no cloud and no stuff. I keep about 6 Gigs of music on my iPad and that is fine for me. My iPod is the basic 8 GB model and I do not really need more. I do not use it much but with iFile, I might be able to use the Apple CC Kit, so I could have unlimited memory.
At least I can carry 60 or more Gigs with me in the form of MicroSD Cards, so I am really not hampered as far as the iPad goes.
When you dig deep into the cloud, you will discover there can be issues. Dropbox and their problems with hash was a problem, but like most issues, it was corrected. Public outcry and Dropbox's desire to stay in business and please customers cured that specific issue.
I think there will be issues for many users that can't deal with the small amount of memory and no slots for SD cards. I think people are expecting the "iPad Experience" and a few will be disappointed. The device is certainly not equal to the iPad. It will likely be acceptable to most, but some of those users will discover that they have a limited device.
I wish Amazon great luck, but I see many unhappy returns. Unless they introduce different models or versions. To do that, there must be a market. For me, the amazon device is just another device in a sea of devices. Not good, not bad, just one more device.