Not every tablet needs to compete on all the same aspects as the iPad.
I'd argue "compete" should mean that someone looking for an iPad might end up buying the competing device instead.
However, in the market today, for all practical purposes, almost all you can get in the tablet space is the Lexus (iPad), when a lot of people actually want a Kia (in this case the Pandigital Novel).
So as time goes on, this is definitely relevant to Apple. I wouldn't classify it as a "threat" quite yet, but over time products like this will at the very least remove a great deal of their pricing power.
In the earlier days of motoring, the Kia equivalent would have competed with Lexus. No one would have known, for example, whether Lexus is luxury, Kia is budget or both.
Just because your dad won't know about it, doesn't mean that features and price aren't competitive.
This is in the netbook range Best buy will throw next to the check-out aisle.
It'll be the same with these two tablets. People may buy the $200 thing because it's cheaper. Some (maybe even myself) might buy it because it's hackable. But nobody who wants an iPad will buy this instead, therefore they don't really "compete" by any meaningful usage of the word.
My point is that few people buy electronics on impulse, without research, before walking into a store.
Perhaps if the price is $500+, but at $200 it can be an impulse buy.
The information is available online. Do you really think people walk into Best Buys before they do their research? Perhaps if money is no object. But for most people, it is, and therefore research is pretty imperative.
I do most of my 'research' by browsing in shops. I often go into places like Best Buys, Frys, looking for 'stuff I probably want'.
Also most people have credit cards. Most people often don't worry about money when purchasing things. They worry later when they're in debt.
The threshold is different for everyone, but I would say that $200 is below the threshold it makes sense to bother researching all that much if it looks like it might be useful. No point spending a couple of hours, extra petrol etc to "save" a few $.
The only way I find out about good apps right now is through word-of-mouth and through reviews on trusted sites.
Apple needs to fix this.
Best is always "WOW I CAN SEE MY COMPUTER" style and worst is always "IT DOES NOT WORK GIVE ME MY MONEY BACK".
Actually helpful app reviews would be a massive improvement.
Also, there are unmentioned features in the iPad's favor, most notably an App Store with 200k titles in it.