Maybe the price is too low. How much it would cost to make something that is better than an iPad and a MacBook Air? $1200 for the 13 inch / 128GB air + $700 for the 64GB iPad is about $1900.
Starting at $1900, what could you do with a Surface? You could put two processors in it, ARM + Intel, and 192 GB of flash. The ARM could be used when it could, so that you get better battery life. People are buying both right now.
This all started with the idea that you could put both devices in the same box. That is where the value is. I don't see why Microsoft thinks that it has to compete with a $1000 handicap. Make the thing $2200, and compete on utility.