Didn't Steve suggest at some point that if the iPad didn't sell they still had room to lower the price?
No, that is not what he suggested. He always said that Apple gets excellent prices for components because they buy tons and tons of them, so nobody else will be able to produce a tablet with the same quality as an iPad for the same amount of money. This means that anybody who tries to compete with the iPad on price will have very, very slim margins. But in the unlikely case that someone builds a competitive product at a competitive price, Apple has plenty of room of lowering prices and still making a profit.
And that makes for a very, very tough environment for a competitor. They may calculate that they may be able to build a product at a price and quality that makes it competitive with an iPad at the current price and make a little bit of money, but there is always the threat that Apple reduces prices and completely kills their profitability at any time.
Will the Samsung Galaxy now be the next firesale target. 20k units sold out of 1million shipped.
That's what Lenovo said, a day before starting to sell a product that competes with Samsung. That doesn't mean it's true. If you read past the headlines, the consensus is "if Samsung had sold only 20,000 of a million units, we would have heard very loud complaints from the resellers. But we didn't.". It also makes you think: If Samsung sold only 20,000 units, then why on earth would Lenovo be entering the market at all? Do they seriously think they can sell 50 times more than Samsung?
It hurts Apple too. Let's not pretend IPad will remain king when it costs 2x as much as competing tablets by next year.
Let's not pretend that there are any competing tablets at half the price. Or better, let's examine what you mean by competing. Of course someone can build a 7" tablet at a lower price. 7" is cheaper. But it's also a lot smaller. Even the iPad would benefit in use from a larger screen; 7" is to me just unusable. So yes, someone can build a 7" tablet at a lower price, and some will end up under the Christmas tree as a huge disappointment for some children, but they don't compete with the iPad and they won't affect its price. And _if_ 7" tablets were successful, then we all know that Steve Jobs will never change his mind until the day he does, and Apple would sell an iPad mini with 7" screen and wipe out any profits that the competitors have if there was a market worth competing in.
In the 10" market, nobody makes anything that is good enough and cheap enough to sell in meaningful numbers, and definitely nobody manages to make any profit out of it. I doubt there is anyone who sells more tablets than Apple sells refurbished iPad 1s. I wouldn't be totally surprised if Foxconn is still building them somewhere in a small corner of their giant plant. So if you go to an Apple Store and say "but the xyz tablet, even though it may not be quite as good as an iPad 2, it is only $399", then the sales person can say "well, if you want something that is not quite as good as an iPad 2, but that is only $399, why not buy a refurbished iPad for $399, full warranty, and it has an Apple logo on the back". $399 gets you an iPad + 16GB + 3G. That's something they have to beat first.
