Apple makes its money on recurring hardware purchases. The iPad owner buys the iPad 2 and the iPad 3 and the iPad 4 and so on and so forth every year.
Losing customers to a low-priced Android tablet before they have the chance to get them on board their "mini tablet" upgrade cycle could be disastrous. Apple effectively had first-mover advantage in the 10" tablet market, but Android is solidly ahead in the 7" market with the existence of the Kindle Fire and the Nexus 7, and it's much more difficult to gain ground in that kind of market. Add in a low-price high-quality competitor and you've got a really steep uphill climb.
maybe. remember when Apple was going to fade out of the computer business because they refused to make a $200 netbook? do you see anybody making $200 netbooks these days? everybody makes airbook clones at airbook prices.
Netbooks were superlightweight computers you could take anywhere, just like the tablet market the iPad created. Most people complained that the netbooks were underpowered toys with tiny batteries. The first iPad addressed both of those concerns successfully.
Sure, that's what they were supposed to be. However, my argument is that to most people they were just cheap computers, for both senses of the word cheap.
Losing customers to a low-priced Android tablet before they have the chance to get them on board their "mini tablet" upgrade cycle could be disastrous. Apple effectively had first-mover advantage in the 10" tablet market, but Android is solidly ahead in the 7" market with the existence of the Kindle Fire and the Nexus 7, and it's much more difficult to gain ground in that kind of market. Add in a low-price high-quality competitor and you've got a really steep uphill climb.