The low cost tablets are definitely a competetion but the performance offered by the quallcom, nvidia chipsets doesnt really gets beaten by the low cost processors such as allwinner. This is with the experience that i faced from a low cost lava tablet. The product itself needs amny more quality parts than processor and display to give a great overall experience to user.
Yes there is an overflow of Made in china low cost tablets around the world. The Indian Government tried a lost cost tablet around $35 for students but couldnot meet production pressures. But tablets market is huge just like smartphone.
Dylan, I think the big back story here is the chip vendors selling all those ARM processors in the cheap tablets, its not Nvidia or Qualcomm or TI, its companies like Allwinner and they are growing fast. History tells us they could become a force in future in the way all low end suppliers move up the innovation chain (innovators dilemma). Its also a major threat to Intel getting a foothold in mobile; why pay for a high end expensive chip if a cheap one does the job. This is one to watch. Woudl love to see EETimes interview these guys.