When everything is in the Cloud, yes. You only need enough to carry you over between WiFi connections. Storage is primarily used for apps, music, and books... and the FIre pulls those over the wire as needed. So... yes, 8GB is more than enough for most people. It's like comparing what you need to pack when you're going to spend a week at your parent's house vs what you need to pack if you're going to spend a week in a cave.
Another important consideration is that, as a Kindle, this qualifies for the new Lending Library. Frequent readers will easily recoup their investment if they use that feature, and it's not available to those using the free Kindle app. So... that $199 gets you a modestly powered but sufficient-for-many tablet that also has access to free books. I see it as being very appealing to a number of Amazon's customers.
I think the real reason for Amazon to sell this tablet is because it is totally Amazon cloud dependent. Even for web browsing, all the html is rendered on the Amazon servers, and only presentation images are sent to the Kindle Fire. That means all your web browsing activity, even on secure web pages, is ripe for Amazon to mine for their own use (and to sell to advertisers). If you think you are doing secure browsing, forget it. You give all your Kindle Fire activity data to Amazon, they resell it, use it for their own marketing, and probably sell your passwords as well.
No thanks, No Kindle Fire.
Actually, laptops that are cheaper than even the Kindle Fire are available right now. The only attraction that a tablet additionally provides is the portability. If one is satisfied with using a laptop (or netbook), then there should be no additional incentive in buying a tablet.
There is a belief that demand of low cost tablet exists. Personally, I think there is because not everyone can afford a $500 iPad. Not everyone needs an iPad. If you are looking for browsing web, reading eBook or magazine, watching your photo album and enjoying videos, Kindle Fire might just be right for you. 8MB may look a bit small. Yet it should be able to hold 2 to 3 100 minutes movies, thousand of phones and, some books and magazines. Plus, if the first release of Kindle fire results in good sales, a 32G or 64G might be available really soon.
I played with mine last night. It's a very capable tablet for the price. The Amazon UI is fairly intuitive. I had my parents up and running using it in minutes. It nicely played music I was streaming from my collection on the Amazon Cloud. While I was web browsing, scanning Facebook, playing Words with Friends, etc. I also streamed a movie from Amazon's library with little lag or any artifacts. Flash websites were also working nicely. Which was a pleasant surprise for an iPhone user like myself. And, the nice touch, it was already configured for me. I was connected to my Amazon account right out of the box. With links to all my digital property (music, Kindle books, etc.). For this price, it's tough to beat...
I'm not sure why you say that. It's a low-cost Android tablet. Yes, customized to make it easy for users to buy ebooks from Amazon, but still a tablet -- not just an eReader.
Personally, for reading books, I prefer the e-ink display of the regular Kindle. But I use a tablet for web browsing, email and general media consumption. For consumers who want just one device for all of that, they will want a tablet rather than a dedicated eReader. And for $199, the Fire is within reach of many more consumers than other tablets, especially the iPad.