Amazon's Kindle Fire is often called the most viable threat to Apple's iPad, but according to Ben Reitzes of Barclay's Capital, Apple CEO Tim Cook and CFO Peter Oppenheimer are unfazed. Reitzes, who's met with both the Apple executives, says the company believes Amazon's aggressively priced tablet serves only as a catalyst to Android's fragmentation problem, and will attract more users to the "stable Apple platform" as a result.

While the pricing at $199 looks disruptive for what seems to be the iPad’s most important rising challenge, the Amazon Fire – it is important to note that it could fuel further fragmentation in the tablet market—given it represents yet another platform. While compatible with Android, the Apps work with Amazon products. The more fragmentation, the better, says Apple, since that could drive more consumers to the stable Apple platform. We believe that Apple will get more aggressive on price with the iPad eventually but not compromise the product quality and experience.

When launched, the Kindle Fire, which may outsell the iPad according to figures published by Cult of Android, will flood the tablet market with a forked version of Android. While technically running on Android 2.3, a version meant for smartphones and not tablets, the device doesn't come with any stock Android apps pre-installed. Instead, it's customized to be heavily intertwined with Amazon services. While Apple can afford to stay calm, for a while at least, the same can't be said of other Android tablet makers, or even Google. Fragmentation on UI, OS versions, and form factors have been plaguing Android ever since the operating system gained popularity among mobile phone makers, and the Kindle Fire will only make things more complicated.