re: Not really
I agree, iTunes/App Store is not a subsidy, and Apple openly admit that App Store is a marketing tool, a vehicle to sell more iOS devices.
I don't agree about HTC, Samsung et al having lower costs because they're using a "free" OS.
Apple have already designed their OS and it's been in the wild, evolving, a lot longer than Android. This is mostly about hardware design, and in that department Apple absolutely excel - in that respect, owning their own OS vs using an off-the-shelf OS does make a difference in their favour, because they understand every part of it, and are able to sustain a symbiosis between parts and software. You simply can't do that with Android, not without spending a lot of money and - importantly - losing a lot of time while Apple steamrollers ahead.
Sure, they'll fine tune their implementations and improve the kit, but every time they do, Apple will reveal it's next product and they'll all be flustering to catch up again.
I've no doubt we'll see new tablets being shown off in the next 12 months which match the iPad in performance, even construction... there's a big difference between being shown at a trade show and being available to buy, and by the time they're on shop shelves, iPad 3 will be announced, and it will all start over again.
Android is already getting messy - I haven't got a clue what Android tablet I'd buy because they all seem flawed in different ways, and don't all seem to have the same OS version, and some manufacturers are releasing them unfinished (Xoom?), and like Mobiles which are being abandoned (no firmware/OS updates?), Android just feels like a temporary, unfinished, unclear platform in general.
What happens when you buy an iPad? You get the latest OS. You don't get some bullshit "bring it back to the shop and we'll upgrade to 4G" line, or "Comes With Flash!" when it doesn't have Flash (but hey kids, it's coming *real* soon).
Thing is, Apple looks after it's brand. Even if they cock up sometimes, and they do a lot, their cockups aren't by a company which will turn a blind eye, because it's not a short-term product to them.
I'm not so much defending Apple as criticising everyone else. And there's bucketloads of irony everywhere in the news these days. Wasn't it a year ago that everyone was taking the piss out of the name "iPad", and that tablets were a stupid idea? Makes you think huh.