And pricing is going to be a big big factor in just how Apple can retain its dominant share in the tablet market. And you can get that Apple isn't willing to cede it to anyone else.
This is why despite Steve Jobs say that there won't be an iPad with a smaller than 10" screen, it is a given that Apple will have to release an iPod touch with a bigger screen.
7" tablets running on Honeycomb as on their way here. And they can cost from $250 to $350. It's likely that Apple can lower the iPad price down to $400 some day but the $300-$350 price range will be all Android or possibly Windows 8 territory if Apple doesn't do anything about it.
Just like in the MP3 player market, Apple just covered just about every price point. $50, $100, $150, and up. The iPod touch can be had for as low as $199. But it still is just an iPod touch, not a tablet.
Apple may need to compete at the $300 price point with a touch and a screen size that is much bigger than the 3.5" currently on the touch. Perhaps even a 5" or 6" and 8 GB at $330 and 16GB at $400. Such a device could be enough to beat back anything that its competitors can come up with.
It's not only a fan boy who wants this to happen but Apple will have no choice but to make this happen. And I think it is going to happen. In the forthcoming iOS 5, an user can split the keyboard so that its easier for one to thumb-type.
That is pretty powerful evidence that this super-sized iPod touch is coming. When it does, I'll be in line for one.
Note: Yeah, I know. I am still holding out for Web OS to make a comeback. Until we know for sure what HP is going to do with it, there's still hope.