So Archos has announced their latest, Froyo running media things.
They've got one with a 4.3", 480x854 screen with 16GB memory for $250. Closest Apple product is the smaller screened but much higher resolution Touch with 32GB memory for $299.
Larger, lower resolution screen means significantly coarser looking display, so let's call that a wash. Apple offers double the memory for another $50, also pretty close to parity.
So Archos is selling a roughly equivalent Touch competitor for roughly the same money. Some people will prefer more screen resolution to more real estate and vice versa, but really pretty close equivalency as far as I can tell. Doesn't appear to have a front facing camera, so no video chat.
So why isn't it lots cheaper? Given Apple's margins, shouldn't Archos be able to severely undercut Apple's pricing? Is it that Archos hasn't yet decided to get "competitive", even though they've been building variants on this kind of thing forever? If Archos could build and sell a 4.3" PMP for, say, $150, don't you think they'd do it? They'd sell a lot of them-- you have to assume that they'd also lose money, or make so little money as to make it a pointless exercise.
People really need to get over the "Apple tax" idea when it comes to these new mobile devices. They're extremely price competitive, if not the price leaders. And it's not because other manufacturers made a "mistake" or just forgot to make them cheaper. It's because Apple has figured out how to keep their costs down, while still delivering best-in-class user experience.