There's a different customer for every price point and feature set. Some over lap but others are strictly in that lane.. who buys the 57 varieties of asprin/advil/tylenol on the shelves because I buy the same old thing every time and if it's not selling it wont be around long.Then who buys S3s? Is anyone? And, who buys the other Atom x5 and x7 computers that are priced between $300 and $600?
I have an Sp3 and S3 I use them for different things mostly although if they made an S3/4 with a core m3 I'd be all over it but I'll take a S4 with a better Atom if they can keep it competitive with then premium ARM SoCs if they don't keep pace I will skip the S4 like I'm skipping the SP4 because of all the bugs.
Who are the S3 customers? The users that want a device smaller and lighter than an SP3/SP4 with the best performance possible in the price range. IF MS polished the S4 more, made it better, faster, lighter with better battery life it could kick asp against the iPad 9.7 . The S3 is good but not great, in some ways it is better than iPad 9.7 but in head to head matchup of like functions it is not but with better fundamentals it really could be the iPad killer that it's not now.
There's so much unrealized potential...