Now that Amazon has released the Kindle Fire HD we can compare these two tablet devices. They are very similar from a hardware standpoint. The Fire HD has a mini HDMI port and comes with 16GB memory vs 8GB for the Nexus7 at the same $199 price. The Nexus7 has a digital compass and GPS sensor, which is not in the Fire HD.
The major complaint about the Fire HD is that Amazon has configured it as a device to market their online media library. Customers have posted product reviews which claim that you have to pay $15 if you don't want ads to display. Even then, it doesn't prevent Amazon from feeding you ads for related products. Other reviews complain about the lack of Flash support and the Amazon Silk browser.
Neither device comes with Flash because Adobe is discontinuing development of Flash for Android, but you can install an unsupported version on the Nexus7. Amazon has their OS more locked down, so it is unlikely that you will be able to make unauthorized software modifications. Some have reported that the Nexus7 slows to a crawl after the memory becomes full. Things like this are usually fixed by a software update. The choice comes down to whether you want Amazon's media marketing platform or Google's "Play" catalog of media offerings. You have to decide if you can live with Amazon's interface vs. a more open system without HDMI output and less memory for the same price. Or, you can always wait for the Apple mini iPad.
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