Well, the 32Gb iPad 1 with Wi-Fi is $599 and Motorola is quoting $600 for 32Gb Xoom with load of more features - USB 2.0 port in itself is a big win along with plenty (1Gb) of RAM.
Only two things matter: The price, and the OS.
No tablet is even coming close to competing the iPad to this day only because of these two things. I'm not sure I actually have to dig into the mass grave of all "iPad killers" to prove my point.
Honeycomb based Android tablets, for the first time, are getting it right on both counts. You may not like Honeycomb and that would be your personal taste, but both feature wise and aesthetics/attractiveness/usability wise, it is looking great in comparison to iOS 4.x.