This argument is getting lost in semantics. What does "compete" mean in this instance? Does Kia compete with Lexus? They both make cars, but I doubt anyone looking at an RX350 ever ended up in a Sportage.

I'd argue "compete" should mean that someone looking for an iPad might end up buying the competing device instead.

That definition of compete is really quite useless. Sure, if you define it like that, you win the argument, but we have learned nothing.

That's how Apple would define it. Lexus doesn't care what Kia's building, they care what BMW is.

True enough, but not everyone needs (pr wants, considering price) a Lexus, some people only need and want a Kia, as long as it meets certain requirements.

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.

And, of course, Apple relies on the image of a refined taste, so its customers will have the illusion that by having an iPad, they are on the same league as those who get driven around in Maybachs.

That's the difference between a mature and a young market.

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.