That wasn't true of the iPad, nor of the 10" Android tablet (a development board) I had at home for a while. With those, the choice was always between the big tablet and the laptop, and my experience was the laptop always won.
Obviously, the one spot where a 7" tablet fails is the important use case of carrying it around while not using it. So the phone isn't going away. Nor, obviously is the laptop.
But my surprise is that, unlike the 10" model, there was space in my life for a 7" tablet. It's really a very different kind of thing, and it's not surprising Apple wants to play in that world.