The Courier would have never unseated the iPad. Long post ahead.
Look at it from a price point; given all the technology that was supposedly in the Courier, there was absolutely no way it would have retailed for less than $400.
Throw out being able to compete from a price perspective.
Now look at it from a value point; if you're buying an iPad, you're also buying access to an iPod, a portable internet device, a portable movie player, a portable gps, a portable gaming device (at least that's what the casuals think), a portable book reader, an app store with hundreds of thousands of applications, the list goes on and on and on.
I might have missed this, but does Microsoft even have an app store? If not, then throw out being able to compete from a value perspective.
Then last but not the least, you have brand power. iPad is directly tied to the 'i" brand which has been a phenomenal success thus far, whereas Courier is tied to nothing.
Throw out being able to compete from a brand perspective.
The final decision at Microsoft was more than likely based on how much money they would have to put into the Courier to make it a success. It was - more than likely - billions of dollars, and they said fuck it.