Amazon would fail miserably at this, and he knows it.
What he’s going to to do instead is concentrate on what he calls “serious readers” which is an unfortunate term, but a true niche that does exist. The glossy screen on the iPad is not ideal for outdoor beach reading, and the free anywhere connectivity of the Kindle is a nice perk. In short, there are plenty of Kindle lovers out there who wouldn’t ditch their Kindles for an iPad. So it would be stupid for Amazon to try and build a poor man’s iPad and lose the fans it currently has.
Besides, Amazon stands to make lots of money with the iPad, thanks to the App Store. I’d venture a guess that more people are using the Kindle app than Apple’s own iBooks, at least so far. The selection on Kindle is certainly much better.
If more companies did this sort of thing, carved out a market and helped it grow, rather than try to take Apple head on, they’d fare much better.