I think that I have it right - A tablet is something that you need to be motivated to buy. An iPhone is a phone - hundreds of millions of people have them. Apple is still the most hip brand, so people will buy an iPhone without really even understanding why it's different than Android.
An iPad might be cool, but the market is no where near what the phone market is. And subsidized pricing makes it even cheaper (up front) for someone to own an iPhone.
What you say and what you conclude don't match up.
- Needing a phone and needing a smartphone are not synonymous.
- Android-based handsets are besting the iPhone in unit sales.
- Apple doesn't have to best the iPhone in sales for the iPad to be a success as we've seen for two years now.
- The PC market is shrinking even faster than before. It's hard to argue that the iPad is not directly responsible.