I'd liken their products to an interesting genetic mutation rather than an evolutionary step. The original machines were expensive and didn't seem to serve any purpose other than allowing people to say gee-wiz. Their claim was that, since the device ran windows, corporations could use existing apps as-is and make them mobile. Nevermind that these apps relied on either (1) a real keyboard for green screen legacy cases or (2) large type and a real mouse. So, developers would have had to modify/rewrite anyway. Therefore, why not write for a blackberry which had the wan connectivity issues solved a long time ago?
Ever notice that Apple hardly ever uses the word "Innovate"? It seems like companies use this word when they haven't ACTUALLY done anything innovative, but would sure like to convince everyone (and themselves) that they did.
That's because Apple generally don't innovate, What they do is do existing things that never went mainstream, and implement them far better than anyone else ever did.
USB, wireless, backlit LCDs, webcams, silly picture making software, music composition, DTP (iWork's layout engine), installable apps on phones, touch phones, etc, etc.
Isn't it more like charge 3X the other guy and die. I can get a similar device from nokia for less than half that or a netbook for 1/3.
Die, yes. Innovate, I dunno. This thing never had a chance.