There's probably very little love lost on Andrew Wylie in the industry as it is. The man's a genius and tremendously well-respected, but he's unafraid to play hardball and his brashness is legendary (he apparently would have graduated summa cum laude from Harvard had he not belittled his own advisor in his thesis). Insiders are predisposed to regard Wylie's decisions warily (or sometimes with a mix of paranoia and disdain), so I imagine there's going to be quite a buzz over "the Amazon Affair" over the next few days and weeks.
That said: I wholeheartedly applaud the creation of an electronically native imprint, and I do think it's the way of the future. What concerns me (and probably everyone else besides Amazon), however, is the exclusive deal that 1.) renders the title only available for sale through Amazon, and 2.) circumvents the publishing house entirely.
While proprietary editions of titles have been around for decades, it's another thing entirely to sell a title exclusively to one vendor (especially a vendor well-known for its severe and relentless downward pressure on book pricing) without even offering it elsewhere. It's decidedly Wal*Mart-esque and I don't think it bodes well for the market, regardless of how many BlackBerry or iPad or Android devices are bought and used to consume Kindle material.
Is this the way of the future? Potentially. I do think publishing houses are going to get a lot smaller and may, in fact, merge with agencies into a Wylie-type model (acquisition, editing, art, and formatting being done by one agency/house, with a small marketing, publicity, and sales staff to handle sales to vendors). But as long as physical books are still being produced, current printing, warehousing, and shipping infrastructures used and maintained by publishing houses will ensure the houses' continued existence.
Now, does my job depend on my not understanding Wylie's cut-out-the-middle-man tactics? In a sense, yes. Am I an idiot? No. Sure, there are some people in this industry so entrenched in the way things are that they'll end up losing sales and going out of business as the industry moves on without them. But those of us that embrace digital sales and are good at projecting and securing them will have a place in the industry five, ten, or even twenty years from now. And so, dear authors, will you.