Maybe the iPad seems kinda spendy, at an entry level price of $500. But consider the history of Apple pricing: Below is a chart of the prices of major Apple products introduced since 1976, adjusted to present dollars.
When Apple really lost its way in the late 1980’s and early 1990’s, the prices of its products were totally insane–for example, almost $1100 for a Newton in 1993. (And the device really didn’t do all that much, in retrospect.) But since then, Apple products have hovered in the range of $1,000 for a laptop and $500 for a hot-shot portable device, such as the iPod or iPad.
As the price of electronics in general has come down, Apple has won–in part because even if there still is an Apple premium of say, 20%, that premium in absolute dollars is only a $100-200 bucks. In the the early nineties, when all computers were far more expensive, that same 20% might come to almost $1,000.