CrunchPad is dead

Today, with little fanfare, and more than a few whimpers, the CrunchPad, the brainchild of Michael Arrington, was officially cancelled.
Too bad, cause it was a cool idea. Create a drop-dead simple tablet PC for surfing, music, reading, video...you know, all the stuff that we do with our electronic gadgets to pass the time between actually doing work!
Mike Arrington had a great vision, but unfortunately a little thing called reality crept in and caused some problems. It's too bad that when that happens, people automatically start looking for scapegoats.
Technically, the only problem with the CrunchPad was it's cost. Even with so-called "free" software [which is never totally free unless you think these folks don't need to eat], the component costs alone drove up the cost of the CrunchPad to over $400 in low quantities. Sure, if you buy a million of them you get a deal. I don't need a million; I only want one.
In time, I'm sure we'll get something close to what Arrington has described. Perhaps the rumored iTablet will be the winner of the tablet race. If so, I guarantee you it won't sell for $199, or even $299. Not this year or next.
Will we ever see a $99 tablet? Sure. But we'll all have to pay the ongoing development costs to drive the component costs down, especially the touchscreen display. For a normal hardware business model, you'll need the cost of ALL the components to be less than $50 to even get close to a model which drives the appropriate gross margin to make it attractive. That assumes, of course, that there are no subsidies like cell phones currently enjoy.
So hang in there, Mike. I'm sure someone will crack this business. Bottom line: it can't simply be a good idea. If that's all it took, tablets would abound. In the real world, companies have to think they have a shot at making money somewhere in the process. Great leaders know this.