Possibly because that's exactly what happened with Android phones? Some of the early Android phones (G1, Hero, etc) were pretty buggy, slow, and kind of wonky. The original Droid was decent, then the N1 came out and was seriously competitive. And there's been basically a string of steadily improving models since then.
It seems reasonable to assume the Android tablet market will proceed similarly.
At any rate, when it comes time to drop $500+ on a tablet, why would anyone choose the one with lots of bugs, performance issues, and few apps?
Your question "When it comes time to drop 500+ on a tablet" is itself rather meaningless. A year from now you'll have Ice Cream Sandwich (or Jello or whatever) on $200 netbooks with detachable keyboards, 7" slates, 8.5" tablets with pop-under keyboards, and even iPad 3-like 10" tablets. And maybe a few other products we can't yet see.
Using Android requires a continuous effort to search for workarounds
My N1 and my wife's have both been rock solid.
And by Cisco VPN, do you mean IPSEC? Or Cisco's proprietary SSL VPN?
Perhaps what you're missing (and what the whole Apple philosophy misses) is that there may never be a "single" iPad competitor that is better than the iPad in every respect and yet Android may "win" all the same, because each different model offers something different to someone who values that.
Perhaps you like having an SD card slot. Perhaps you like to plug in a (real) keyboard with a trackpad. Perhaps ultra light weight is your thing. Perhaps you just have to have a real HDMI port. Perhaps you're a 3D junky. Perhaps 9.7inches is just too big - or too small, for you. Perhaps a stylus does it for you. Whatever it is, if there is a segment of consumers who lust after it, there will an Android tablet featuring that. If everyone's killer feature is different then Apple's single-model, uniform approach will never be able to win. In this sense I strongly suspect that Apple is quite happy not winning and knows that they're far better off maximizing profit on 25% of the market that really does all want the same thing rather than trying to cater to the long tail of consumer desires. Let's face it, when it's a choice between profit and market share, Apple always picks profit.