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.
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.
They probably are limiting their market to gizmo-fans with a glut of disposable income, and that could affect their bottom line.