Round 1 goes to Apple . The iPad, as expected, has caused a big stir, and given people like Walt Mossberg reason to gush with enthusiasm about the death of laptops. Throughout, as various members of the press have mused about the death of Amazon’s Kindle, I feel compelled to point out that, contrary to popular belief, Amazon is in a better position now than it was before the iPad. That’s right, if Amazon comes out swinging, Round 2 will go to Amazon . Here’s why:

Amazon has the bookstore and all that entails. This is simply something that Apple can’t touch. Leave aside for a moment the fact that Random House books are still not available in the iBook app. Even if Apple could offer a full library of books, it can’t offer the decade’s worth of reviews, comments and community connections that Amazon’s bookstore has. As I told the Wall Street Journal last week: “If you’re an iPad buyer, chances are about 90% that you’re also a book buyer on Amazon. Amazon has your credit card on file, they know what you like. …That relationship is the key to selling books.”

—iPad buyers can and will read Kindle books. My prediction is that more Kindle books will be read on the iPad in 2010 than will iBook books. Think about it, if you are about to buy a $9.99 or $14.99 e-book, would you rather buy it on the iPad and only be able to read it on the iPad—even if you have a MacBook or an iPhone—or would you rather buy it from Amazon, which gives you the ability to read that book on your iPhone, Blackberry, PC, Mac, or, yes, Kindle? Amazon will score technical points with the judges each time an iPad owner logs in to browse, buy or read a Kindle book.

Notice that I did not defend the current hardware device known as the Kindle. I don’t believe Amazon expects these devices to live for more than another five years or so. In fact, it’s very likely that the current Kindle devices will get a sharp price shave in order to sell the 3.5 million e-ink Kindles we’re estimating for 2010. And I’d be surprised if we don’t see a new Kindle model in 2011 at a significantly lower price point to exploit the fact that it’s such a great e-reader for traditional books if nothing else.

But propping up the market for e-ink devices is not where the action will be. Because for Round 3 and beyond, Amazon’s success will depend on it introducing a full-color, full-media, touch device that I have presumptuously nicknamed the Kindle Flame. Here’s what Amazon should do to fan the fire:

—Go head to head with Apple on a media tablet. HP, Dell and Lenovo are busy positioning their present and future tablets against the iPad. But none of them can offer what Apple can: an integrated content and user experience that makes life simultaneously simpler and more enjoyable. But Amazon can. Sure, it has no real hardware strengths to speak of (remember how ghastly the first Kindle was?), but we live in a world where there are a dozen companies in Taiwan and mainland China that can whip up a device to Amazon’s specs.

—Make content even more central to its device than Apple has. People spend between five and six hours a day with media, most of that watching TV and video. The iPad’s great misstep is that is doesn’t meaningfully increase the amount of that media you can centralize in that single device. Yes, it can dominate music, and the addition of apps for magazines, newspapers, and books add maybe an hour’s worth of media consumption per day. But it really doesn’t do a good job with the four-plus hours of video we watch a day.

Yes, you can buy or rent iTunes movies, but without a way to get a significant amount of TV programming onto the device, it is only marginally better than the laptop most of us have available already. But if the device could synchronize with your DVR (think TiVo , not Comcast) or even if it had an over-the-air HD tuner built in, the Kindle Flame would suddenly have dramatically more consumer appeal.

—Innovate on the partner side. Make a splash with this new device by partnering with another disruptor. Google’s the obvious choice here—it has an OS it wants to promote, and it offers all the cloud-based services and productivity experiences Amazon doesn’t want to develop or compete with. Google’s an odd partner, and some have reported that partnering with the search giant is like dating a man from the Mad Men era—it’s all about him, not about “us.” But the two-headed dragon of Amazon and Google  could breathe enough fire to cause fear in both Cupertino and Redmond.

Of course, my advice for Amazon can also extend to Sony. Sony makes TVs, game consoles, laptops, and, now, the world’s No.2 e-reader. It also owns content assets, though it hasn’t always succeeded in making those assets work for it in the market. Indeed, if TV content is the biggest hole in the fabric Apple is weaving, Sony could deliver that much more easily than Apple could—imagine a connected Blu-ray player with a built-in DVR that synchronizes with Sony’s version of the iPad (I have no clever name for Sony’s version, though if the past is a reliable guide, I fear Sony will christen it the DTM-5001). There’s a device ecosystem that could finally work for Sony.

Yes, folks, this match is far from over and even if Amazon takes Round 2, there’s a lot of fight left in all these fighters. And that’s just the way it’s supposed to be: we don’t want a repeat of the iPod market, where Apple’s extremely successful device so dominates the landscape that no one else can even hope to innovate and change the market. So even if you’re an Apple fan, be grateful that neither Amazon nor Sony are going to take a dive, because the iPad’s best chance for becoming as magical and revolutionary as Steve Jobs promised is in response to serious pummeling from the competition.

James McQuivey is an analyst at Forrester Research, where she serves Consumer Product Strategy professionals. He blogs here