I'm very curious what Mr. Jobs thinks about this. Was the likelihood of this (and the lack of legal recourse) considered before manufacturing iPads in China? How much does it bother Apple? Are they far enough on their next products that it's not a big deal?
Far from a threat. The arrival of clones on the market is expected and is necessarily a part of the plan -- everyone knows that a successful new product will be physically cloned overnight, which is why so much energy is expended on the brand, the associated services, the software, etc.
Meanwhile, this thing is a positive embarrassment for the Android brand. Or it would be if the word "Android" were ever publicly associated with the thing. Something tells me that Google's trademark lawyers -- and perhaps even this knockoff's manufacturers -- will make sure that this fact is not mentioned out loud except on tech news sites...
I would say it's a tribute to Android that it has such wide applications. It's a cheap and mostly functional device. Android devices aren't fashion statements; they are commodities.
I'd agree, the only real threat would be one which masquerades as the iPad well enough to run iPad software & access the app store. Then they'd have a support / image nightmare on their hands. Right now, all they have is something which feeds on a market Apple barely exists in, if at all.