Don't conflate Apple's high-margin & (relatively) low-marketshare/volume computer business with their high-margin & high-volume iPad/iPhone business. In order

Don't conflate Apple's high-margin & (relatively) low-marketshare/volume computer business with their high-margin & high-volume iPad/iPhone business. In order for someone else to win on price, they are also going to have to beat Apple on cost. If a Dell laptop and an Apple laptop cost the same, who would ever buy a Dell? And the prices aren't even close, sometimes Apple is 2x the price of a Windows machine (and yet people still choose to buy Apple). But in the tablet & phone space, Apple prices are not much higher than Android/WebOS/Wp7/Blackberry. And Apple's costs are clearly lower. There are a lot of reasons why this is so. Right now Apple has their own distribution network, the other guys generally don't. Apple has better brand value and has negotiated killer deals with the phone carriers. But at the end of the day the most important factors are the volume & the narrow choice of parts. Apple has more volume than anyone else, by an order of magnitude. That means they get better prices from suppliers and they can spread their fixed manufacturing costs across more units. Higher unit numbers always leads to lower unit costs for a lot of reasons. So if you want to compete on a device that is close to the iPad, you are going to be really hard pressed to beat the manufacturing cost unless you ramp up to build the same number (which is super risky if they don't sell). The only way to get a lower manufacturing cost is to buy components that are lower level than the iPad. This is what happens in the computer business. Going back to Dell v Apple, how many people really would argue a $700 Dell is better than a $1200 Apple in the quality? Maybe in value, but not in quality. In the tablet & phone space, there are not as many corners to be cut. You can fill a computer with a cheap motherboard, hard drive, etc. You can stamp out a crappy sheetmetal case or mold some plastic rather than machine the case like Apple does. Most people won't notice the difference becasue you interact with the computer through peripherals. On the mobile device the big cost drivers are hard to skimp on. A smaller battery makes a functionally inferior device. A crappy case or screen impacts the look & feel of the device in the way a case on a desktop doesn't. There are few options for CPUs and we don't have the same extraneous CPU cycles like in the computer world so a crappier one is very noticeable. So how do the other companies get to a lower cost? I just don't see it happening without making a drastically inferior tablet, and I don't think people are saying that tablets are unnecessarily powerful right now.