Based on what information?

We "know" that Nexus 7 / Kindle Fire has a cost of $200.

Subtract $? in assembly profit because Foxconn's role building iPad's is much smaller than ASUS/Quanta's role building Nexus 7/Fire

Subtract $? because Apple receives better component prices than ASUS & Quanta do.

Subtract $? because the iPad mini has a cheaper screen.

Subtract $? because the iPad mini has less RAM.

Subtract $? because the iPad mini has a cheaper CPU.

Add $? because the iPad mini has more flash.

Add $? because the iPad mini has a rear camera.

Add $? because the iPad mini uses Aluminum rather than plastic.

You have to guess which column is bigger, but in my estimation, the "subtract" column is at least $20 larger than the "add" column.

Who's to say that the Nexus 7 and Kindle are not being sold at a loss to drive sales of cloud content? Pulling $200 out of the air for their production costs does not mean we "know" anything. Have you seen a component by component breakdown with estimated extended pricing in line with their production scale? I'm not saying you're wrong, but a citation or three would strengthen your argument.

iSupply data estimated the low-end retina iPad margin at 37%, which is consistent with a $129 profit. Apple is of course a master at extracting more profit by market segmentation.

Apple is basically the BMW of technology. The difference between a run of the mill 3-series BMW and a Honda to the average commuter is image + $10,000. The iPad yields a premium because its an iPad.

...this is exactly what people don't seem to understand. Lots of people buy Fords and Hondas, and not so many people buy BMWs and Mercedes Benzs, but there's still room in the market for both categories, and BMW and Ford both turn a profit. I don't know why it need to be a 'winner takes all' scenario when it comes to tablets.

Network effect. The more people on platform X, the more developers on platform X and the more attractive it is to users, and so on.

While this simplistic model suggests a full winner-take-all model, history strongly suggests one often ends up with two markets, the "high cost, lower penetration" & the "low cost, higher penetration". Most recently, Apple OSX vs. Microsoft Windows. But the resulting duopoly can be as impenetrable as the simplistic monopoly to an upstart.

I think it is because ever since the 90s we don't think a company is "winning" until the DoJ starts getting worried about anti-trust stuff. Profit is not good enough, a company must start crushing its competition beneath its feet until people in tech can declare a "victory"; until that happens we have to keep cheering/jeering.