That's what HannStar, a company with 12 years in the business of producing LCD displays, is claiming now. Jordan Popov, European product manager, stated at a preview show for the Berlin IFA in September that the required resolution of 1280x800 for Honeycomb doubles the cost of panels, making it hard to compete in terms of price with other tablets, especially for smaller manufacturers. More info past the break.
HannStar released the HannSpree HANNSpad SN10T1 (very sexy name, I know) late last year, essentially a remake of the ViewSonic GTablet, with the same Tegra 2 and other decent specs, but also the same crappy Tap'n'Tap interface on top of Froyo 2.2. Of course there is a market for cheaper tablets with screens that aren't IPS quality and Google should allow for lesser res screens, since 7" tablets are ever popular (and it runs just fine on the 1024x600 screen of my Nook Color), but maybe manufacturers should looks elsewhere for blame.
Instead of shelling out money for absolutely unuseable UI's like Tap'n'Tap and mounting status LEDs on your devices, maybe reconsider your priorities and who your target market is. I'm pretty sure that in due time Google will have to reconsider the restrictions considering 7" 1280x800 displays would actually be outrageously expensive, but for now it is what it is.