If it has the right software and is easy enough to use, I can see this happening. Given the choice between a $400 iPad and a $200 Kindle Fire I think I can see a lot of people taking the cheaper option.

Whether it is sustainable will depend on the performance/usability of the Kindle. The problem with current iPad competitors is that at best, they come in at the same price point as the iPad and fall far short in terms of usability.