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I personally believe the market for these devices is not the current pro or even committed amateur PC user. It's regular people, who don't know what RSS is (for example).

These people couldn't give a monkeys stuff what the hardware components of a tablet are. They just want to know what it does. The App Store makes Apple an OBSCENE amount of money. Hardware profit margins will fall like you say. Hardware makers will churn out Android tablets, and some will be abysmal and some will be amazing.

But the first question nost normal people ask is: what can. I do on it?

And the answer to that lies in apps. So whole hardware makers struggle to make profits because their hardware profit margins are razor thin, who will be making money, and how?

Developers, publishers, and owners of successful application stores.