You guys keep saying Apple will compete on price, but name one product line where price is the priority in the history of the company...
The cheap iPod shuffles. The iPod line has had a variety of price points and models for all types of buyers. Just because they haven't done anything like that with some of their now more mainstream products doesn't mean they won't.
And of course, there will still almost surely be an "Apple Premium" on any iPad mini (my guess is $50 - $100 more than current 7" competitors).