From how I see it, form factor is never a problem. The only problem is the software and services around a given screen size. If you have the right stack for it, you will win, if you don't, you will lose just like the Playbook.
Amazon is going with both the 7-inch size, because it knows it can satisfy its customers with the content it has and make them buy more. That doesn't mean that other 7-inch tablets will start selling like hot cakes.
The same is true of the 10-inch tablet as well. No one before Apple could make a 10-inch tablet work. That doesn't mean that the 10-inch size was not good. Even after other OEMs learned how you can make it work, they didn't have the ecosystem around it.
Amazon already has a sufficient ecosystem to sell it tablets, while others do not.
At the end of the day, SOFTWARE RULES!
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