OSNews

But seriously, I think that the biggest perceived market is for an entertainment device, that is to say essentially a multimedia Kindle, good for books, videos, and interactive online content (newspapers, magazines, blogs). As long as you can keep it price-competitive with the kindle and make buying books and movies for it easy (iTunes store) then you at least have the Kindle market to plunder.

I don't know about that. Parts of that list remind me of what the PSP is supposed to be for: it has a web browser (that even supports flash, IIRC); it has video and audio playback capability; it has pod/videocatching capability; and it has a video-disk format, and at least a few real, popular movies out for it; and it even has a 720p tv-output capability (at least the 3000 series does). And yet, out of that list of theoretical capabilities, all I ever really do with mine is play Tekken 5 and listen to podcasts. There are many reasons that I don't use the movie-playback feature; the biggest is that it doesn't work with my DVD collection, and doesn't work well with my T.V. Similarly, with it's size, it's not really a good portable music-player (not to mention that it doesn't play ogg vorbis!).

I expect that most people don't want to watch videos on small screens on portable devices when they have other options. If they're going to watch a movie, they want to lay on the couch and watch it on TV. I think people will be leery of buying a video that's hard to get onto their TV; they'll also be leery of buying a device that can't play their DVDs (which I assume would be the case, that you'd be buying videos from the Apple Store, and not ripping DVDs).

Apple already has the iPod Touch and iPhone for iTunes video, music and trivial web-browsing anyway (and as the article says, there's net-tops for everybody else).