that's just it, if MS and Intel who are both sitting on an enormous amount of spare cash could subsidise the cost of a 1st gen cheap x86 part, sub 400, it would blow the socks of anything else out there.
Produce the cheapest ARM solution that shows of Win 8, say around the 200-300 mark, then subsidise an adequate 300-400 x86 part, people will always upgrade if there are options, but its not about that, MS and Intel should try and saturate the lower end of the market whilst providing for the top end as well.
It "could" work very well, but only if they can get cheapish x86 parts or have very good sub 400 ARM parts