It's not a hangup it's the facts. When it comes to competitive ecosystems it's iOS vs Android. If I want the latest and greatest Android App I can find it and buy it on Google Play on any of my Android devices. You can't do that on the Amazon App store. Most of the time they lag behind the Google Play store and Apps on Google Play tend to be updated more quickly than what's on the Amazon App store.
So with my Nexus 7 or any other Android device I can do more than I can with my Kindle Fire HD. The Kindle Fire offers a convenient approach to use the device to interface with most things related to Amazon. That's not a bad thing but it's certainly not the ideal approach if you want to use your Android devices for things other than Amazon.
And getting back to Apple. If you can find the Kindle Fire HDX being used in, industrial applications then I would agree that it's a direct competitor to the iPad because the iPad is not a one trick pony which the Kindle Fire is and that's Amazon.
Saying the Kindle Fire HD is a direct competitor to the iPad is like saying the Nintendo Wii U is a direct competitor to the PlayStation 4 or XBOX One because it's not. Those devices are in different categories.
I don't want anyone to think i'm dissing the Kindle Fire line because I own them and enjoy what they do but it's typically related to Amazon.
You keep looking at this from the perspective of the small minority of customers. Yes, there will be a section of iPad customers that won't consider the Kindle, but there is still a huge section that will. The simple matter is that most iPad users and most Amazon buyers likely use their tablets for exactly the same thing--media consumption. They don't use industrial applications or need obscure apps. The apps they do need are generally going to be available on Amazon's app store. The most commonly used functions by these user on the iPad are the same things being done on a Fire--web browsing, video, books, games, email. These are the customers both companies want because they are going to use their own ecosystem for their entertainment and more likely than not these customers will consider these two devices more than any other. Amazon and Apple are competing for these customer's wallets. It cannot be explained any simpler than that.
Just try answering this question--what's the first tablet a Kindle Fire customer would considering getting instead?
Again, you are looking at this from the small minority of users, the tech savy (or even moderately tech conscious) who wouldn't be happy with the Fire, and may very well not be happy with an iPad either. Apple and Amazon aren't competing for these customers--you're right there. But these customers are a drop in the bucket compared to the general consumer they ARE competing for.
Here, try this. Name the best selling tablets right now. If your answers don't contain either iPad or Kindle in their names, you're simply incorrect.
Yet you think the bestselling tablets aren't competitors.