John Paczkowski via All Things D

A theory: Though consumers desire the iPad for the functions it performs, they want it more for what it is. Just as many preferred the iPod to the generic MP3 player, so too do they prefer the iPad to the generic “tablet.”

So there is a tablet market, but it’s been subsumed by the iPad market, just as the MP3 player market was engulfed by the market for the iPod.

I have said this many times that the iPad will dominate Android and other competing tablets in the same manner that the iPod dominated all other MP3 players. There are two reasons the iPhone didn't follow this model.

1. The mobile phone market existed and had very successful participants before the iPhone was introduced while the iPod and iPad created a device category where no other company had any previous success.
2. The iPhone is Apples only product that they do not completely control. They are required to go through the carriers to deliver the product to consumers. The carriers also obscure the true price of the device by subsidising all smartphones reducing the ability to differentiate between iPhones and other smartphones.