The $199 price point is magical, in that it gets into many people's "sure, what the hell" toy budget.

Amazon figured this out first with the Kindle Fire. Everybody else is piling in after them. Maybe the $199 Microsoft Surface will be a 7" tablet, just like all the others. Maybe Apple's 7" iPad will also clock in at $199 for the base model. It seems like Amazon established the right baseline, and the next challenge will be who can first hit $149 or $99.

For what it's worth, I've seen a bunch of incoming college freshmen coming through my office this week and it's interesting to see what computers they've pulled out. Most have oversized monster laptops from Dell, HP, and the like. One had a three-year-old netbook. One had an iPad plus Bluetooth keyboard. I didn't see a single MacBook Air or equivalent PC ultrabook. I'm not sure what that says...