In terms of absolute dollars I agree. As a consumer though, I'm going to be looking very hard at what I am getting for an extra 20% cost over the iPad. Many consumers are still going to consider the iPad a much better value.
Someone looking to buy a $500 iPad might well be put off by a $600 price tag on another tablet. On the other hand, someone looking to buy a $700 iPad (or even a $500 iPad plus a $30 case for it) probably won't be, I wouldn't think.