Look at it this way.
When the iPhone came out, it did not actually cut into the existing market - it created a new market. For several years, Blackberry & company kept selling as many, or more, units as they sold before the iPad. Why? Because their core customers didn't necessarily want an iPhone, so even though their marketshare eroded, it was because of a new market created, not because their customers were leaving them. However, over time, those lines became blurred, and the iPhone started slowly seeping into Blackberry's market as well...and we end up where we are today. Palm & Windows Mobile diminished, BlackBerry shrinking.
Am I saying exactly that will happen here? Not necessarily - but it could, especially if Amazon releases a 10" tablet as well next year. People that want an iPad but can't afford one buy the Kindle - it becomes hugely popular, and maybe at that point people that can afford the iPad, say, well, there's this much cheaper alternative that all of my friends have & love, why not?
Basically - even if those people aren't iPad customers now, that doesn't mean they couldn't be in the future, especially if future iPads are cheaper...but now they aren't even potential iPad customers. They're Kindle customers.