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The iPad starts at $500, and I believe that entry level is the one most people buy. The Xoom doesn't offer anything without 3G. While it's true the prices of each are roughly equal when comparing the 32GB + 3G iPad with the Xoom, the next iPad is likely to be coming out soon and Apple has very little history of raising (or lowering) prices. This is what you really should be looking at as a comparison for its market success... and with the first iPad fairly close in its specs, it's easy to imagine the iPad 2 offering more value at a lower cost to many consumers. (Take note of the emphasis)
The fact that Apple offers a tablet that is $300 less than the Xoom, no matter how great the specs on the Xoom are is probably going to be the biggest thing that determines the market success of Motorola's tablet. It's going to be very hard to unseat Apple when it comes to tablets and while not it's not impossible, having an $800 entry level and a mandatory data contract is not the way to do it.
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