I think these companies are looking at this from a long term perspective. This and the smartphones are the only growth markets post-PC. Almost everyone will own a smartphone and/or tablet sooner than you think, and just a small portion of that market justifies the current slaughtering they will incur to gain entrance to the market and establish a beachhead. At this point it's a battle to the death for the #2 spot.

Apple has a massive lead by both defining the market and being almost 100% vertically integrated. Where they weren't vertically integrated, they guessed right on the opportunity factor and cut deals for components while the rest of the market was asleep.

Production will eventually level out, and competitive software will get better, and other tablet will eventually be able to turn 90s era PC-like margins on their products. Depending on how smart Apple plays the game (and I am betting on very smart), this may take a few years to over a decade.