Maybe it's hindsight, but the Apple TV seems more like a peripheral than a platform - the Airport Express streams music and the Apple TV streams video. I don't think it was ever intended to be a big hit, but an Applishly elegant solution to a specific problem. Viewed from that perspective, it wasn't really a failure - they sold plenty of units and have many happy customers. The fanboys may be let down that it didn't revolutionise television, but I don't think Apple had any such aspirations for the device.
I think the same gap in expectations applies to the iPad - we were expecting a conventional tablet and Apple delivered something that was tailored to a smaller, more specific set of tasks. Although as geeks we naturally prefer devices with lots of functionality, Apple prefer to deliver something that does one thing well. My mind is naturally drawn back to the Slashdot thread on the iPod - people criticised the lack of features, but the iPod came to dominate the market because it did one thing better than anything else could.
I think you've actually identified the key problem with the iPad - it doesn't do anything better than other devices.
In contrast, the iPod had the scroll wheel - an interface so superior to the alternatives at browsing large collections of music that every iPod since has stuck with it. Similarly, the iPhone had a killer feature - a mobile web browser that actually worked. Also, both products were polished versions of devices whose commercial viability had been established for decades.
The iPad lacks a selling point. It plays music, but it's too large to replace a portable music player. It doesn't support the codecs that 99% of the video files people view today are encoded with, and has a poor aspect ratio for watching 16:9 TV or movies. It has a fancy ebook reader application, but I'm betting that glossy LCD screen will be unreadable in direct sunlight. And it has a web browser that works well on a phone, but will probably feel very constraining on a full-size device.
It seems as if Apple believes the touch interface itself is the compelling feature that justifies the iPad, rather than anything you might do with it. I'm skeptical - touch-based computers have been disappointing marketeers for the last twenty years. They have a certain cachet, but other interfaces are less frustrating in practice. The iPhone is probably the best-case scenario for touch, and yet there's still a huge market for phones with a physical keyboard.
In short, I'm still waiting to see a reason why someone would buy an iPad over a task-specific device or a laptop. (Particularly for $500+ a pop) Nothing in iPhone OS 3.2 is compelling enough to sell to a mainstream audience, IMO. Of course, the iPod and iPhone had significant issues in their first iteration as well, but Apple addressed them in subsequent generations and they'll hopefully apply the same treatment to the iPad. The difference is that the iPad starts at a disadvantage so long as it launches without a killer application.
You're making a common mistake by assuming that a person would buy an iPad (or anything) for one specific reason and that it must be the best possible option for that purpose. People don't actually work that way.
For instance, you say it doesn't replace a portable music player, but that is only going to dissuade people who are specifically looking to buy a portable music player that fits in their pocket, in which case Apple will gladly sell them one. To everyone else it is still a potentially positive feature.
Likewise for everything else. Each supposed failing only matters to a fraction of the potential audience, and then to a variable degree. The degree to which readability in direct sunlight matters to a person is a function of how much they intend to read in direct sunlight. I don't know about you, but most of my reading happens indoors, at night, by lamplight.
an interface so superior...every iPod since has stuck with it
Not true. The Shuffle and Touch models, along with the iPhone, have never had scroll wheel interfaces. The scroll wheel was an exclusive feature of the iPod, but it was not the singular force behind its success.
the iPhone had a killer feature - a mobile web browser that actually worked
The iPad has this same browser on a larger screen and with better performance. That alone is a fairly compelling feature for people who might otherwise buy a netbook primarily for web-browsing.
It doesn't support the codecs that 99% of the video files people view today are encoded with
Is there data to back up that claim? It seems a bit...exaggerated.
The iPad's limitations will only be known once people get their hands on them, but I think you can extrapolate from experience with the iPod Touch and Apple TV. All of Apple's devices are limited to MPEG4 in the mp4 container or h264 in mov, with strict limitations on resolution and bit rate. They don't support divx/xvid, avi, or mkv. Very, very few files are encoded under those restrictions unless they were created specifically for an Apple TV or iPod.
So, again, you don't actually have any data to back up that claim? Ok, that's my point. You're talking from your own experience with your video collection. That's fine, but you should understand that that may not always be a good indication of the demands of millions of other people. I strongly disagree with your estimation, but I likewise lack data, so I won't make any claims about percentages.
The iPad's limitations will only be known once people get their hands on them
The video codec support is listed on the tech specs page on Apple's site. A more exhaustive resource is Apple's developer site. This is not mysterious unknown information.
I think the same gap in expectations applies to the iPad - we were expecting a conventional tablet and Apple delivered something that was tailored to a smaller, more specific set of tasks. Although as geeks we naturally prefer devices with lots of functionality, Apple prefer to deliver something that does one thing well. My mind is naturally drawn back to the Slashdot thread on the iPod - people criticised the lack of features, but the iPod came to dominate the market because it did one thing better than anything else could.