1) Apple sells a crap ton of iPads. Their biggest problem will be that they can't make them fast enough. Don't whine to me about "openness" or the notifications system. They'll sell lots of them and we all know it.
2) HP gets the TouchPad into stores. There are no queues to buy one on day one, but it does OK in the first few weeks. Sells maybe a million units in the first three months.
3) Consumers shopping for a tablet are now faced with a choice: I can buy an iPad and wait four to five weeks for it to arrive (those are the times Apple's website is currently quoting), or I can buy a HP TouchPad and take it home today. For some, that'll be enough to bring them over to HP.
4) HP's TouchPad gets some traction. Enough to justify a version two. Nowhere near enough to knock Apple off it's perch.
5) HP does something badly wrong. One of the MBAs gets in the way, makes a decision he has no place making, and hands one of HP's competitors a major competitive advantage. Maybe they decide the TouchPad should be US only for the first year. Maybe they piss off developers in some creative way, so no-one writes apps for the platform. I don't know what they'll do, but I can't shake the feeling that they'll fuck it up somehow.
6) Android tablets come out too. Nerds like me buy them, while our grandmothers buy iPads and TouchPads. There are many more grandmothers in the world than nerds. Android tablets do badly. Attempting to explain this, reviewers looking at 2011 retrospectively will cite a confusing UI, a flash implementation that was promised but never materialised (or materialised in a broken state), and many of the same compatibility issues that we see now with Android phones.
7) Microsoft announces Windows 8 with a completely redesigned UI based on Metro. This UI will try to work just as well with the keyboard and mouse as it does on touch devices. Ballmer will use the phrase "bridging the gap" a lot.