Apple broke the mold with the iPod touch - selling apps for pennies that can be used on as many as 4 other devices for free? Legally? What's not to like? Thanks Apple.
Everything Apple has done since then has grown out of that: iPhones (an iPod with a phone in it) and iPads (big iPods). But the consumer is fickle and the low price of buy-in (for apps at least) means they might not be as deeply entangled in iOS as you might think.
There are also many people who have never owned an Apple device because they (the devices) are not cheap (in any sense of the word). If, when considering the purchase of a computer/tablet-thing, such people are presented with a "good enough" alternative (like the Amazon Kindle ) they might bite.
Amazon are already operating a curated App store - before they have even launched their tablet. Apps are linked to a user account - there is no limit to the number of devices you can install them on (or who they are made by).
US customers can download a different free app from Amazon every day. Most of the apps, like on iOS, are free or cost pennies and the $250 saved on the hardware buys a hell of a lot of them.
Steve Jobs once ruled out a 7" iPad. It would be incredibly awkward for Tim Cook to reverse that decision and "copy" the form factor favoured by Apple's many competitors. So, I think, eventually 7" Android tablets will surpass the unweildy iPad, perhaps in the same way the PC overwhelmed the Mac in the 80s. Today is the dawn of the post-iPad era.
TechCrunch Amazon Kindle story