I speculated about this a while back in an earlier article. It seems like a smart move for Amazon to push its content and services into the living room. Their product seems to be clearly modeled on the Apple TV, but with games and apps included with the system (the current model of Apple TV does not offer games or apps, but this may be changing soon).
The thing that gives me pause about it though is the potential price tag of the console. The article simply says it will be “below $300.” That’s a very vague pricing possibility, and price might be very important since Amazon is not the only one rumored to be working on this kind of console.