No, Xoom sellouts are not good news. Don't congratulate Moto for failing to understand the market or what Apple is bringing to the table. This thing needs to flop harder and faster than the 3Com Audrey or the Palm Foleo to teach the other hardware companies a lesson on pricing themselves out of the market. Beating or matching Apple on pricing while having an advantage in features & flexibility is the ONLY way Android as a tablet platform stands any kind of chance of making inroads against iOS.
I played with a Xoom extensively today and in no way, shape or form do I see the value proposition in it. It's NICE hardware (as is Honeycomb) but not revolutionary, nor do I see how it's THAT much better than a Viewsonic GTablet to cost over 2x as much. The Xoom as an overall package seemed extremely rushed to me. Some occasional pauses and hiccups with switching apps and navigating through photos and toggling some menus & widgets. Maybe it was just the one I used but sometimes the touchscreen was overly sensitive and other times it seemed to lag a bit. I also miss the hard buttons (or at least a Nook Color or Apple-style single home button). I wouldn't pay a penny above $550 or maybe $600 for the Xoom in its current configuration (esp with no microSD & no LTE at present), especially considering how ill-suited the Android ecosystem is for tablets right now. Hopefully firmware updates will be frequent and substantial. I cannot wait to see an iSuppli teardown to reveal whether or not Moto has a ginormous markup on this thing or if Apple truly is able to squeeze their suppliers and leverage huge economies of scale in a way other companies cannot.
At the very least, a Xoom flop will make Moto think twice before giving a middle finger to their fans in order to appears Big Red (ie no wi-fi version). If this pig is a hit, then it will only encourage higher prices and further tie-ups between all of the decent Android hardware makers and the carriers while discouraging innovation and reasonable pricing.
Imagine if the first Asus EEE PC netbook back in '07 had been sold exclusively with a 3G radio built-in through a single carrier. It would have been DOA and the entire netbook industry that otherwise was sparked overnight likely would never have occured. And if the iPad had launched last year with a single comparable SKU (the 32GB 3G model) through AT&T stores, it would've been at best a minor flop and we wouldn't even be going tablet-crazy right now. Same thing is in effect now with the Nook Color.
I'll go on a limb and say that the entire iPad and "iPad killer" craze has been fueled by "impulse" purchases at retail of the $499 16GB model. I know probably 15 or more people with iPads and at least a dozen of them are the 16GB wi-fi model (ie the "cheap" version). These things are a luxury, not a necessity, and folks are looking for the lowest possible point of entry to the tablet experience and not yet another monthly contract.
Look, I love Moto (since the days when I carried a MicroTAC) and Android (got a Droid 1 on launch day) but this has just been too much to handle lately. First the infatuation with Blur, then the locked bootloaders, then the overpriced Atrix docks, and now the Xoom debacle. Sanjay Jha is at best arrogant and clueless or, at worst, secretly intent to on undoing all of the progress Moto has made since November of 2009.