Apple (Nasdaq: AAPL) bulls have dismissed the threats posed by Amazon.com's (Nasdaq: AMZN) Kindle Fire.

In their optimistic scenario, Amazon's $199 entry-level tablet simply widens the market the way that Android wireless handsets have expanded the smartphone market. As long as Apple continues to be the one to grow profitably, who cares if Amazon is losing money initially on Kindle Fire sales or that Google (Nasdaq: GOOG) is promoting Android as an operating system for free?

Well, at least one analyst is revising his outlook for Apple tablets this holiday season.

Canaccord Genuity's Mike Walkley is out with a new analyst note on Apple that is bullish outside of the iPad 2.

Walkley is reiterating his buy rating and raising his earnings target for the new fiscal year. He also sees Apple selling 30.5 million iPhones this quarter, ahead of his earlier projection calling for 29 million handsets. However, he's also slashing his estimate of iPad units from 14 million to 13 million.

Let's face it, this has been a great quarter to go shopping for a cheap tablet. Hewlett-Packard (NYSE: HPQ) cleared out its webOS-based TouchPad tablets for as little as $99. Research In Motion (Nasdaq: RIMM) reluctantly slashed its moribund PlayBook tablet. Amazon and Barnes & Noble (NYSE: BKS) hit the market with entry-level tablets priced at $199 and $249, respectively.

Last holiday season there weren't too many major tablet companies undercutting Apple on tablet pricing. It's the new fashion statement this quarter.

Consumers also know that Apple has refreshed its iPad product line early in the year. Some are pointing to a March introduction for iPad 3.

I recently argued that Apple was due for a price cut on its tablet. It wouldn't be a shock to see the iPad 3 roll out for less than Apple's historical $499 starting price, though the more logical route for Apple may be to slash iPad 2 prices by $100 or even $200 when the iPad 3 comes out, and continue to market both tablets.

We'll see how this all ultimately plays out. Apple may take comfort in knowing that the HP and RIM price cuts are temporary, but Amazon isn't going to back off its clearly compelling $199 price point and Barnes & Noble isn't going to bow out unless it financially bows out completely.

Your move, Apple.   

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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for HP. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.