Do you think there is a big demand for $1k priced tablets??
Did you read somewhere that these tablets would be priced at $1k, or are you just assuming that this will be the price point?
I think the ones at $999 will have some fairly premium features, but I still expect to see some down to $599 or $699. Don't forget that iPad Air with 128GB of storage is $799 for WiFi, and $929 for the Cellular option.
$499 only gets you WiFi and 16GB of storage - which is insufficient for anything more than a few tablet apps. It wouldn't be enough for music or video storage, and it certainly wouldn't be enough for any serious productivity applications, such as the hypothetical Office 365 that you expect to come to iOS.
By the way, you'll be hard pressed to find many tablets that offer more than 32GB of storage - which makes them useless for any kind of real work. The alternative is an incredibly slow micro-SD after-market card. A quick check on Amazon shows 64GB cards with 70Mb/s read speeds for $50 - which is a tiny fraction of what real SSD's can achieve. I saw one SATA-III SSD for $85, which offered 120GB of storage, with 410MB/s read performance.
That's at least one reason why Intel is in a unique position. Their architecture and platform is optimized to offer adequate storage and memory to achieve a true "2-in-1" value proposition. ARM tablets are pretty far behind in both memory and storage, which is why the OS is optimized around simple apps, rather than real applications.
It costs more to get more - apparently a concept that the ARM cheerleaders are unfamiliar with.
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