Oops. I failed to go on to the relevant conclusion: At $499, iPad hasn't left room for anyone to undercut them with something that isn't cruddy, both hardware and software-wise.
The main problem for the competition is the OS. How are you going throw something together for $20 a unit profit if you don't have an OS for it? Neither Android or, god forbid, Windows Mobile, have a shippable touch interface,or even decent video playback, you have to put large software engineering R&D;toward it with only a snowball's chance of return on investment.
You are right that the "Mac owned the desktop and lost it by charging too much, or because they didn't license to cheaper manufacturers" concept is a myth.
I was there. I saw the whole thing.
1) Mac never owned the desktop. Apple ][ did though and Apple charged way too much for Macintoshes because they didn't want them cutting into Apple ][ profits.
2) The cheapest Macs were crappy because they did not have enough RAM. Apple charged WAY too much for RAM to make them run properly. This gave Macs a poor reputation.
You are right this is not relevant to the iPod, iPad, or iPhone discussion. The reason, however, is that Apple products are now priced aggressively without regard to whether they cannibalize sales of other Apple products. The iPad is a particularly surprising example of this.
Worrying about the iPad Imitators? Don't
Worrying about the iPad Imitators? Don't