As with most things, this competition comes down to money.
Amazon's new device is great, but in the end it exists solely to weld you into their ecosystem and their content, thus they have a customized version of ICS to prevent access to anybody but them. Don't get me wrong, love Amazon and am highly invested in content from them, just don't want to be utterly dependent on them to decide what I can and cannot do with my purchase. And lack of GPS is a killer for me. Yes, they lost money on each machine (likely) but force you to guarantee that they'll make it back by binding you inexorably to them for everything that makes the device useful. Of course, unlike Google, Amazon HAS to make money on their content, it's their main business model. Google doesn't, their revenue comes in largely through ad and marketing service. Apple of course sticks it to you both ways, overprices their hardware (though it is VERY good) and requires you to get whatever is on it from them.
Do any of you think there'd even be a Kindle Fire HD or a soon-to-be-announced iPad mini if wasn't for the jab in the ribs from the Nexus 7?