Very good point, and clearly he sees the other tablets as valid competition. The question is in what way? Two important lesson he learned with a previous big battle he was involved in (Windows vs Mac), is that being better and first doesn't guarantee long term success. You also need enough of the market to adopt it and set their expectations high so that they will then disregard competitors. Apple was pretty much first to mass market with a GUI, and maintained a superior GUI to the competition for a number of years. Due to Apple's missteps after Jobs was forced out, along with the efforts of Microsoft and IBM, most people use Windows on PCs today because it became good enough.

His comments about the competing tablets in the 7 inch space may be an attempt to try and push people to the iPad first, to ensure their expectations are set very high when considering competitors. If an end user picks up a 7 inch tablet running a version of Android not optimized for tablets, they still may see it as good enough, and not investigate the iPad deeply to understand the differences.

The tablet clearly has a lot of potential, and will probably continue to shape personal computing well into the next decade. Due to it's potential to cannibalize the notebook market, an area Apple has a decent presence in, the tablet market is something they wants to hang onto for long term success.