Apple is playing to a different audience, so I doubt the price of an iPad is going to materially change. Want a cheaper iPad, go to the refurb/outlet shop.
It's also unlikely to run legacy applications well, especially the ARM version. Again the tablet market requires a different approach, Microsoft is trying to get to it's own vision of this, but it won't be Apple's.
Microsoft's vision needs to be profoundly better in it's first iteration, just look at what's happened to RIM and HP. It also has to be cheaper, and sell well, for the price reduction hope to become reality. A cheaper product is also going to skimp on screens and cameras, again rendering it second tier device. To be competitive you've got to at least be at parity with the competition, otherwise you're left trading off features and Apple wins again.
Having used an iPad 2, some Android tablets (Nook Color, Nook Tablet, Acer A500), the 4:3 screen ratio is a winner for surfing. Apple loses on attachment of external devices, flash drives, HDMI, etc. Tablets uniformly suck at data entry, editing, development, etc. Having a keyboard helps, but remind me again what the driver is for having a tablet, and the utility of the format.
Give me a netbook (10-11") with a retina display, now we're talking.
Posted from an Acer Aspire One