But Apple can take the hit...
Apple can run at or near cost on its iPads for a few reason:
- The end to end consumer experience. If you enable all the iCloud settings, everything seemlessly moves between devices. If you take a photo it appears on all iDevices and your laptop/mac. It goes the other way too (laptop->iDevice). Plus "cute" features like purchasing music/movies/TV/apps in one place moves it to all places. In households with more than 1 device this feature is seen as a big value add.
- It takes a cut of ~30% on all iTunes/App store sales. This is funneled back into making the initial cost of the device a lot more palletable to Apple. (Think about it - how many 99c/79p purchases do you make on the device? I can think Ive probably underpinned apple to an additional $75-$100 already).
With the Android model, there is no pushback to the tablet maker on app purchases. This means they have to be at a profit on each device. Only Amazon could hope to emulate the iPad model with tie-ins to purchases on the Amazon site. Any and all other apps payed for just go to google and the app developer.
And I certainly havent seen anything close to point 1 on the non-Apple tablets - although I'm happy to be corrected as people have been asking me for ideas too :)