You're assuming people will choose to buy tablets like they buy smartphones: with an attached contract for data service. I don't believe this will be the case, nor do I believe Apple's competitors will be able to undercut Apple on price without cutting their margins to zero or less. Though I would not be surprised to see Microsoft attempt to break into the new tablet market by subsidizing big losses by its hardware partners.
Apple does sell OS X on PCs. They're called Macs.
Will Apple license OS X to the commodity PC makers of the world (Dell, HP, etc.)? Never gonna happen.
You're missing the point:
First, the Xoom is profitable. It is subsidized by carriers. It isn't without its issues-I'm more likely to buy an iPad, but that said, the iPad really isn't too cheap. And as Apple fans are quick to point out "More matter than specs"-yeah, true, so someone will release something thin with iPad 1 capabilities in a few years with a camera and price it at a huge floor under the then current iPad. You can call it a Netlet if you want.
The problem with Apple's model is it doesn't deal well with competition. All is good so long as things run well, but if Apple loses momentum, I think it will sink. Consider:
People are buying Macs, yes, but they're still buying more Windows machines. Of the macs that are bought, its not clear how many of them are running bootcamp. Furthermore, if there is a "halo effect" the numbers on Android can indicate that it is more accurately described as a FAD.
There, I said it, Apple is a fad with a lot of people. The problem is that Apple's supplies to market are limited with what is deemed (by fans) as "quality"-Windows does not have this restriction. Once people realize that there are competitors with great quality-as is going on in the Android market-Mac sales can't last. That said, I'm writing this on a Macbook Air. Its quiet, its cool, it runs like a dream. A few friends have more recent Macbook Pros-not Sandy Bridge. Same thing. I have an old Merom notebook which fried power cords all the time. Apple quality isn't that much better than the competition, actually. I mean, again, I like the feel of the build, but I've gotten Apple Duds before-especially 4G iPod Classics (before they were called classic). The Apple Market was a lot smaller then, even for iPods (4G was the breakout model, though the previous ones had strong sales, that was the huge growth if I remember correctly). The fact is, before 2006, no one really had horror stories with Apple. I wonder if that's true now. There are, of course, infamous reports of Dells from the same period.
Thus you have a myth that Apple runs like a Porsche against a Kia. Not so fast-they all use the same parts for the most part. Much of the problem facing a lot of laptop manufacturers is that, bottom line, Intel products were terrible around the time of Pentium 4. And Vista came out.
Apple's still getting success of that too, but Windows 7 isn't that bad. Thus its a temporary gain.
Apple will never license Mac OS X. People will still buy Macs because they will be the first priority of such an OS, and they will feel/look better than a lot of competitors even if they did. But as a lot of competitors have good build qualities, Apple's growth will eventually stall and then recede as people stop caring.
And Apple will do well when it gets stuck at 10% of the market again (which I think it will) because Apple carries no debt. Jobs has cleaned up the ridiculous R&D Apple used to pay out, and 10% of the productive electronics market is billions of dollars a year-especially at Apple's margins. Heck, at that estimate, the stock still has plenty of room to go up.
Again, you have to step out of the reality distortion field. No one fielded a competitor to the iPod aside from Creative, which was user unfriendly at the time, and Microsoft, which was going through its Vista trauma for most of the history of the Zune. A lot of the real competition has moved into smart phones. If Apple can not completely dominate the tablet market in the long run, it is probably game over for growth. I think you have to be aware of how supremely lucky Apple was to both control iTunes and the iPod at the same time. If either failed, then both might've failed. And my god man, have you used iTunes lately? If the current product had been the initial product, Apple would be buried by Windows Mobile right now.