The jury is still out on the whole shipped vs sold debate surrounding the Xoom 1, but it is likely safe to say that the Xoom 1 has seen lackluster sales at best. And by sales I mean sell through to the consumer, where someone skips in to the store and actually gives a retailer money in exchange for a box containing the Motorola Xoom. There's no better way for Motorola to follow-up a flop than with a new tablet that has beefed up specs and higher cost to produce.
If Motorola's intention is to ship the Xoom 2 alongside the Xoom 1 and to lower the retail price of the Xoom 1 by at least $100 then this would be a great move for them. If the thought within the Moto brain trust is to go all in on a higher priced quad-core Xoom 2, well, that's a gigantic mistake.