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He said "These are among the reasons we think the current crop of 7-inch tablets are going to be DOA, dead on arrival."
The reasons are 6 in total, 3 related to the screen size, 3 aren't. It's about the "current crop", this was in October 2010. How well did those 7" tablets do? I can't even name any.
I can only conclude that he was right at that moment in time. Now Apple can put more pixels on the screen, meaning a smaller iPad can still display everything a normal iPad can. They couldn't do that in 2010, meaning a 7" iPad would have sucked.