When Steve Jobs unveiled Apple's iPad 2 last week, one feature in particular leapt out for tech observers: Its price. Although the iPad 2 has ramped-up processing power and a host of new selling points, it still retails for $499 — the same as the original iPad — thanks in part to Apple's ability to cut deals with parts manufacturers. Meanwhile, two competitors, Motorola and Samsung, have released tablets that cost more without delivering the iPad's cultural cachet; Motorola's Xoom, for instance, retails for as much as $799. What will it take for pricier rivals to overtake the iPad 2? (See a review of the iPad 2)

Only low prices will work: Nobody expected Apple to deliver a new, improved tablet for such a low price, says Jason Perlow at ZDNet, and rivals are already "eating the iPad 2’s dust." The problem for competitors like Motorola is that consumers have little reason to test out a more expensive, "completely unproven tablet platform." It's a "no brainer" that they'd just buy an iPad instead. The only way Motorola can overcome buyers' apprehension is to find a way to "undercut the iPad 2 on price."
"Motorola: To compete against iPad 2, you need a cheaper Xoom"

They'll need better features: "Makers of iPad competitors should be concerned," says Eric Zeman at Information Week. If they can't compete on price, rivals will "have to compete on features" instead. The problem is that "based on the Honeycomb tablets I've seen so far, none of them have specs that drastically outshine that of the iPad 2."
"iPad 2 undercuts tablet competition"

And they should target untapped market niches: Rather than trying to rip off the iPad, says Avi Greengart at SlashGear, rival tablet makers should "copy Apple's old advertising tag line and Think Different." Apple has already cornered the market for creative types, so "competitors should target IT managers, knowledge workers, outdoorsy people, or some other group" and market to them. It will require imagination, but separating themselves from Apple's brand dominance is the only way to gain traction in the market.
"Why it's so hard to compete with the iPad"