Of course, there are lots of potential pitfalls in that process -- there are several middlemen who can mark the price up, there are lots of suppliers to coordinate and play against each other, and there's the constant risk that your design is lousy, or unmanufacturable (when the factory is half a world away, it's hard to establish a good design feedback loop), or that you'll cut so many corners trying to meet your budget that your brilliant design turns out lousy. This is presumably why there are so few decent $200 web tablets.
Incidentally, though I used to be a product engineer in the cellular components industry, I'm no expert on the overall design/manufacturing process -- I was a tiny cog in the giant cellphone machine. For actual knowledge I recommend something like Bunnie Huang's blog posts about hiring folks to build the Chumby:
http://www.bunniestudios.com/blog/?cat=6
UPDATE: I just surfed through my own link, and I have to say that Bunnie is a great blogger. His hints for getting quality designs out of Chinese factories (my capsule summary: "live in China, watching the assembly line, for as much time as you and your budget can stand") are in line with my own experience.
I'm not sure where the market is for a tablet like this personally. It's less useful than an iphone (not portable), and less useful than a laptop (No keyboard).
One man's useless junk is another man's dream...
You'd think that recipes present our biggest problem needing a technological fix.
BTW: I agree that if it's cheap, easy & nice, there'll be all sort of uses for it.
Not only does it store recipes, it has an integrated cutting board!
We've come a long way. From $10.6k, 70kg recipe computer with an integrated cutting board, to a $200, 0.5 kg recipe computer with touch screen.
The start-up that finally cracks this recipe problem will really make it.
I think this could be the computer equivalent of the Flip Video. Simply & obvious.
Actually, that's a very good sign. Every one of the smartest EEs I know works like this: In apartments or labs filled with piles of random wires and oscilloscopes and beat-up hard drives. You can tell which parts are the important ones because they're the ones that are only half-covered with random junk.
The first danger, when this project was announced, was that it would be a vanity project like so many others before it. It would consist of 85% talk, and 10% fundraising, and the remaining 5% would be outsourced to some team of professional ditherers with flashy Powerpoint presentations who would produce lots of shiny plastic mockups and cost overruns and never quite manage to ship anything. Or there would be a giant mob of 'contributors', each of whom is invited to bring a single resistor to be soldered into the heap.
Instead, after the initial rush we seem to have seen very little loose talk, which implies that there might just be a handful of people quietly plugging away on the thing. And now we get a benchtop prototype. All promising signs.
Of course, I have no doubt that you can produce a single, working desktop prototype of a web tablet. That's still a far cry from being able to mass-produce a reliable version for $200. But, if they want to get there, they appear to be on the right track. And, if they fail, at least they might learn exactly why, because they will have gotten into the weeds.