Apple could sell a billion iPads if they had approached it as a standalone product instead of an expensive luxury accessory to your full-featured desktop computer/laptop. The iPad already does 90% of what 90% of consumers use their home computers for, and does most of it better. But can a poor college kid or grandparent not wanting to spend a grand on a computer opt for a $499 iPad instead? Nope. But if Apple filled that remaining 10% of required computer tasks, it sure could.
1. It has to function solo, without the requirement that you sync it with a real computer. Since there is no optical drive for loading media, at the very least it should allow the user to input their iTunes account info and the iPad would automatically re-download all of their purchased items from the store directly. And since space is limited, it'd have to let you delete purchased media to free up space and re-download them at any time. The xBox 360 does this, so there's no reason the iPad couldn't too. Users should be able to plug their iPod into their iPad, and have the two sync directly to one another. Eliminate the expensive middle man, and the number of potential customers is endless.
2. It has to be able to print. If it can't send a document to a printer, it's a non-starter for the education market and college students. But if it could print, that opens a huge market. Apple's already offering a physical keyboard accessory; in three years when iPad's sell for $299, if point 1 and 2 were met there could be an iPad on every student desk in the world.
3. It needs basic photo-manipulation capabilities. They'll sell you an adapter to load your digital photos directly into the iPad, but all you can do then is look at them and share them electronically as-is. If they added basic photo-manipulation (cropping, levels, white balance, retouching), as well as the ability to print, the iPad would be a killer start-to-finish photography toolkit. Since they created fantastic versions of the entire iWork suite for iPad, I don't think photo-manipulation is asking too much.
4. Multi-tasking and Flash support. These things being missing from an expensive add-on to your real computer is tolerable, but if the iPad were to be a standalone product you'd have to let people run a chat application and word processor at the same time. And Flash is a requirement to experience all of the web; I don't know how Steve Jobs can surf the web with giant gaping holes in the middle of pages and claim he's getting the full experience.
If the iPad had these things, it could do 100% of what 90% of consumers do with their home computers. And as a standalone device, it really would be a netbook killer. Apple has made the mistake of assuming netbooks are dominantly purchased as a secondary computer; more likely, a huge segment of the netbook market are consumers attracted to the entry-level pricepoint. And since Apple has no interest in selling complete Macs (as in with a monitor) in the sub $999 price range, a full-featured iPad would be tapping a new market. A market of consumers that can't or don't want to spend $1,000 just to do basic tasks.
As the iPad functions now, the only potential customers are those who already own a full-fledged computer; and since 2 out of 3 computer sales are laptops, only 1 out of 3 computer owners can't already comfortably surf the web from their couch. The rest of us have to decide if we want to pay extra for a device that does 90% of what we do at home already, while that Mac we spent thousands on collects dust in the corner until we need to perform that other 10% of tasks.