Apple just has a headstart. They certainly won't be able to match Android pricing. It's mac vs pc all over again.
Check out what's on the table for 2012
http://en.wikipedia.org/wiki/Texas_Instruments_OMAP#OMAP_5
In a $300-$400 tablet that is going to be amazing.
28nm for crazy power savings, 2ghz multi-core, and multi-core GPU.