Of course
Amazon's cloud storage is only available via WiFi (and then dependent on one's broadband speeds...of which media requires a healthy dose). If you don't have access to WiFi you'd better be happy with whatever you can squeeze into 8GB's of memory. That said eBooks, magazines, etc. take up very little space. However I wouldn't want to try and store a few movies, a TV show or two and some music for that next plane ride or family vacation.
I think there's no question that
Amazon is betting the farm on the "cloud." That's not surprising for several reasons. First, they have what is arguably the best server infrastructure in the world. In addition to the huge business they do hosting corporate server farms, they even support data storage for competitors like Netflix. That server capacity is already prepared for the demand they expect. Second, adding storage to the Fire would have increased its cost on pretty much a dollar for dollar basis. Based on current retail market prices, offering a 16 gig Fire would have added at least $50 to the price of the Fire.
Amazon clearly wanted to crack the $200 minimum price for the Fire, a figure that research has indicated is a critical price point for consumers.
Third, offering built-in 3G support would mean saddling purchasers with the same sort of monthly data plan carriers offer for the iPad. And that at a time when 3G networks are already bottlenecked with demand.
Amazon believes, correctly I think, that a year from now 4G service will be the minimum expectation for new devices. And that market has yet to sort itself out. Finally, of course, if one wants 3G/4G support, especially with multiple devices, it makes much more sense to purchase a single data plan built on a mifi hotspot.
Amazon recognizes, I think, that consumers who want such access are likely to have dedicated portable hotspots or tethering plans with their smartphones. Had the Fire been introduced a year ago, the absence of built-in 3G support would have been a major weakness.
Amazon believes, and I think they're right, that over the next couple of years it will be much less important.