True Costs
"But some of those Android tablets cost more than the iPad.
So cutting corners doesn't seem to significantly reduces the cost."
Don't forget also that Android tabs can do a significant bit more than a stock iPad2, without having to buy dongles. HDMI out and an SD card, to name two. Both dongles are fairly pricey for the iPad2. HDMI out I can see leaving off a tab in most uses, but the SD card is almost a necessity for content consumption (my music collection alone could easily fill an iPad2).
So, what is the cost of that ultra-cheap $500 iPad2 after the adapters, i*branded attachments, etc? Yes, the Galaxy Tab 7" is way overpriced, as is the Xoom for the most part. We'll see what Samsung delivers with their 8.9" and 10.1" models.