Apple has high margins because they make desirable products and often charge a premium for them. On top of that they have confidence in their products and this leads to their securing good component pricing early on. I don't know if they will go with a higher resolution display for the iPad 2, but it can use one and I'm sure they've considered it. ToTTenTranz says they wouldn't even consider it so I obviously disagree.Cost is secondary?
They have the highest margins in the computer business. Probably the highest of the smart phone companies too.
They achieve lower costs through scale -- using A4 across 3 different product lines. Could they ramp up a high DPI display in high enough volume this year or next?
Marketing and product development style are two different things. I don't believe Apple thinks "we need a $500 tablet" and designs a product to meet the price point. They say "we need a tablet people desire" and if the product will be too expensive for anyone to buy they don't make it.Do you honestly believe that? Have you ever seen an Apple keynote?
Half their speech is about price points.
The iPod was like this. Steve wanted the iPod before they made it, but Apple sat on the idea until the right storage device became available.