No, if Apple wants to crush the competition, low balling the price to give a perception the product is cheap is not the way to go. Creating a product so awesome that folks want it even though its priced higher than everyone else, that is Apple's game. And they tend to play it rather well
agreed. The AppStore and ITMS make this "yes, this is $50-100 more than the competition, but it's better to start with,and look what you can do with it after you buy it."
For anyone but the most tech savvy, Kindles and Androids, don't have that 'after market' appeal.
$199 is a great price point, but I feel you'll see that the 'next' turn of the crank (when the iPad Mini RD comes out, pushing this rendering down $50-75).
Long game. Apple is in a position to look beyond this next 10Q, and it uses that to strategic advantage.