Before I give you my thoughts on the subject, I direct you to Amanda Hocking's blog where she talks about her success. Before you run off to self publish your work on Kindle, read it. This is the most important part (emphasis mine):
I don't think people really grasp how much work I do. I think there is this very big misconception that I was like, "Hey, paranormal is pretty hot right now," and then I spent a weekend smashing out some words, threw it up online, and woke up the next day with a million dollars in my bank account.
This is literally years of work you're seeing. And hours and hours of work each day. The amount of time and energy I put into marketing is exhausting. I am continuously overwhelmed by the amount of work I have to do that isn't writing a book. I hardly have time to write anymore, which sucks and terrifies me.
Here's my $0.99 on the subject.
Self-publishing is not a new phenomena. When I went to look up self-publishing on wikipedia, I thought I would find out that it started sometime in the 1970's or 80's. Imagine my surprise to discover that the first documented self-published work was John Milton's "Areopagitica" in 1644 and quite a few classical authors started their careers self-publishing their work. The link to the wiki article is here. While some of the information in the article might not be entirely accurate, my point is that self-publishing has been around for a very long time. It hasn't toppled traditional publishing, yet. I don't think it will this time either.
We've seen this movie before.
If you've hung around writing groups for any length of time, then you'll know what I am talking about. Lord of the Rings came out, was a phenomenal hit, and writing groups saw a surge of aspiring authors writing the next Lord of the Rings. Harry Potter, ditto. Twilight, ditto. Christopher Paolini, ditto.
So what's going to happen is that there will be a surge in writers uploading their awesomely awesome decalogy thinking they're going to become millionaires like Amanda Hocking. The Kindle market will be flooded. The gems of self-published stories will be buried in a mountain of stories that should only be shown to one's mother. After being disappointed with several of those awesomely awesome stories, Kindle readers will get savvy and stop searching through the Direct Publishing offerings. Those authors who have worked just as hard as Amanda and chose to self-publish will be that much harder for a reader to find. This is not a good thing for aspiring writers.
On the other hand, after a few rejections by agents of those writers of awesomely awesome you-must-be-a-twit-for-not-seeing-how-brilliant-I-am manuscripts will flounce off the query trail and over to Kindle Direct Publishing. Which will leave a less crowded field in the query game for aspiring authors who work hard, hone their craft, and choose to pursue traditional publishing. And that is a good thing.