"If they feel the need to compete with anyone on price in order to protect their business interests, they can do so with price cuts deep enough and long enough to drive most potential competitors out of business."
If they try to drive competitors out of business by pricing below cost, this is illegal. Apple is already getting looked at by regulators, and I doubt they want to invite more investigation, which slows a company down and may prove really harmful to the culture (see: Microsoft).
If this just means Apple might be willing to cut their margins, then yes, I agree. So the key is to make something with a lower cost structure than Apple has. Not going to happen for iPads in the near-term, but this industry changes pretty quickly...