Right now their target market is pretty saturated - Kindle
Sure it has a cool factor, but that is a steep price to pay to be cool if you own another device already. Plus this first generation is missing a lot of things that I think they'll eventually add. This seems like a product where early adapters will have some buyers remorse when the subsequent generations come along and are a far greater product at a better price - see the original iPhone for exhibit A.
I'm not an Apple hater, so don't read that into this. I love my iPod, and if T-Mobile offered an iPhone I'd seriously consider it (but only if they figure out the battery life problem. 2 hours of run time is unacceptable.). I'd consider a MacBook if it weren't twice as expensive as a PC
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