Oh and regarding the "it's a computer if it competes with computers" argument, that line there between computers/non-computers is so blurry it virtually is non-existant either. Since when were humans, and specifically our buying habits, so rigid and easily explained?
Consider this hypothetical:
1) I have a Mac Pro, but need something to use out on the go.
2) All I need is to quickly check a website, check my email, and play the occasional game, and that it be as light and portable as possible.
Myself, I'd buy the 13' Macbook Pro. Others may understandably buy the MB Air. Still others might go for the iPad. Others may just trash their old phone while they're at it and buy an iPhone.
To judge that one thing competes with another in a particular "market" involves arbitrarily defining a "market" in the first place, not something that is in the least bit objective. The overlap between the feature list of the iPod Touch or iPhone and iPad is lengthy, yet a person who buys the former is for whatever reason not shopping in the "PC" market, while the latter is?