When Motorola gave its Q4 earnings report, CEO Sanjay Jha noted that his company anticipated a hard quarter due to the launch of the iPad 2. While that tablet has yet to even see a reveal, it is expected to chill sales of the Xoom and every other non-iOS tablet. Which may be why Motorola is charging $799.99 for the 10.1" slate when it launches on February 24.
Best Buy will be the exclusive initial retailer, although that is almost certain to open up once the Honeycomb slate gets into wider circulation. A $600 WiFi-only model is also expected to launch, but Verizon seems to have worked out some deal with Motorola to delay that. The initial Xooms will all be 3G enabled, and the WiFi will be locked until you purchase a one-month data subscription. In the words of the flyer:
"To activate WiFi functionality on this device, a minimum of one month data subscription is required."
See, it turns out being open source has a terrible, unexpected downside. Since the carriers can pretty much alter you at will, you open yourself up to serious abuse and gouging. I'm sure AT&T would have LOVED the 3G iPad to be exclusive for the first month or two after launch. Even if Google disagreed with Verizon and Motorola's decision, there isn't much they could do to stop it. For one thing, they're already asking Motorola to risk quite a lot by launching this slate.
It is easy to forget that Android tablets are still entirely unproven. As much as they seem a "sure thing", there's no actual evidence that consumers really want them. Don't forget, Samsung has shipped far more Galaxy Tabs than they have actually sold.
Motorola seems to be ceding mid-range tablets to Apple and rolling straight for the "luxury" market. They say it is because the Xoom is a higher quality device. We'll see whether that quality is worth an extra three hundred bucks in less than a week.