Not sure about that. If Matlab is their main competition, then they are much cheaper and you get tons more (that you may never use but its there...) for the price of just Matlab's base software. The downside is that the engineering community by and large uses Matlab because it's what the legacy code is and it is taught in school. I've used Mathematica and I enjoy using it (and Python) more than Matlab but at the end I have to use Matlab because that's what my colleagues use.
Are they that close now to be often interchangeable? Last I looked, they were as different as Lisp is to C: Mathematica is very strong for symbolic manipulation and discrete simulations and DSLs and can somewhat do numerics, whereas Matlab can get you serious performance in numerics but at the cost of awfully inflexible language.
