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I think "multifunction trumps dedicated devices" may be true for average user with low expectations.
Smart phones/tablets allow you to take pictures, watch movies, listen to music and surf the net but you get an average output.
You get much better picture and more options even with average camera. If you are satisfied with "I was there" and group photos of people at some party then smart phone is for you. If you are even average photographer you'll get dedicated digital camera.
You can watch movies but you'll be restricted by screen size. If you plan on watching YouTube videos and news clips just to stay in touch then OK. If you want better picture and sound you'll watch them on computer or TV.
Music will be same if you listen it on earphones.
You can surf the net but are again limited with screen size. If you plan on using it only to stay current on social network sites than OK but nobody will use it do do serious work.
Swiss army knife is same. Everything it can do you can do with other tools better, but Swiss army knife has those things in one package and they do job well enough.
I think ereaders will survive because they offer little but require little. It can be used to read books and that's it. But they also cost less than tablets and eink gives better reading experience. And that's how it should stay. If you start adding additional capabilities you end up with poor man's tablet that comes close to tablet capabilities but also their price.
Sure, if you have tablet anyway you'll use it to read books and not buy dedicated reader. If you don't have and don't plan on buying one you'll buy ereader for part of the cost and get what you want in the end.
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