The iPad might be called a non-portable PDA. It can't replace netbooks without a keyboard, and it can't replace smartphones because it doesn't fit in your pocket or on your belt; I consider it a toy rather than a tool.
That reminds me of Biz and Ev of Twitter talking at Startup School about when they were first playing around with it (I wish I could remember how it was described). In essence, Biz said that it was neat but not very useful to which Ev replied "neither is iced cream".
Just because it's a toy and not a tool doesn't mean it's worthless.
Edit: After re-reading your post, I'm not sure that is what you were saying. Apologies if I misrepresented you.
I was careful not to say that. If it isn't a useful business tool, that doesn't necessarily mean that it won't be as successful as any gaming console/handheld.
They probably are limiting their market to gizmo-fans with a glut of disposable income, and that could affect their bottom line.
