Carrier subsidy is a big deal, giving customers false sense of low prices. People need a plan for a phone, so they choose convenience and familiarity. I used to do the same until very recently. When you see a shiny, brand-new phone selling for cheap with a contract, it seems like a no brainer to go for it when you need a plan anyway. It is an ignorance, but a rather rational one.
In contrast, tablets are not such a necessity thus consumers pay more attention to prices and value. Plus, you can't ignore the impact of Kindle Fire and Nexus 7, which were sold for very low prices due to Amazon and Google pushing the platform to keep their respective ecosystems competitive. Any new tablet should be able to be viewed favorably to iPad at the high end, and Kindle Fire / Nexus 7 at the mid-to-low end, in order to be successful.
I don't think there is an unusual racing to the bottom in the tablet market. If anything, I hope the bubbles in the phone market to bust. (a long shot, but not impossible)