There is for sure a market for dedicated devices. Using the phone as an example, I could get an iphone and it would replace my phone and my ipod Touch. But it also requires a really expensive contract, and I don't use a phone enough to justify it. It is much cheaper for me to have a very inexpensive phone plan with corresponding cheap phone.
Similarly, there still seems to be a market for garlic presses and other 'unitasker' kitchen gadgets even though you could theoretically do it all with a chef's knife
