No surprise the iPad is just a fad and people are starting to realize how limited it is. Its frustrating on a lot of cool websites and no file system makes it very limited.
You apparently missed the part of the report that says:
A combination of strong Q4 sales and the announcement of the iPad 2's launch across major markets at the end of March contributed to Apple's iPad shipments being down 31% sequentially. The full impact of the iPad 2 launch will not register until subsequent quarters, as Apple gets the product into the hands of consumers.
Interpretation in english:
Two major factors contributing to the sequential decline of iPad sales this quarter:
1) A lot of consumers received an iPad 1 as a holiday gift and did not need a 2 and
2) Apple's larger multi-country launch caused inventory constraint and Apple was unable to sell more because they didn't have any excess to sell; i.e., it's a really popular device and we anticipate that being reflected in next quarter's sales report.