Wired makes the case that Amazon wants its own device to take Instant Video to a broader market, and to get around Apple's cut without the kludgy workarounds it's had to use so far.
You might not even need cable. As a cord-cutter, I’m using Instant Video to watch the latest season of Justified on my iPad. They’re available hours after they air on traditional TV. Amazon’s understandable refusal to let Apple take a cut of its content business means I must pay for episodes in the browser before watching them on the iPad’s Instant Video app. But I still think the overall experience is better than iTunes. Streaming is so much faster than downloading and doesn’t take up any space on my device. I’ve watched Breaking Bad, The Americans, and the awesome Luther the same way, and I’ve never felt like I’m missing out on some mythical TV experience. Yes, I’m not tweeting along to the show in “real time.” But that’s way less important to me than paying for only what I want and nothing I don’t.
I'm not so sure having a device (which Amazon's bound to sell at a loss) is any threat to other platforms like Apple TV. They want their content on as many devices as possible, and if Netflix is able to make subscriptions to streaming video work on the Apple TV then Amazon certainly could. Paying 30% to Apple for individual shows might be painful (perhaps less so for recurring subscriptions initiated through an iTunes account), but I'm sure that Netflix has a different arrangement for getting its channel right up there on the Apple TV.