The iPhone is a more profitable platform than iPod. Cannibalizing the iPod market was a move that maximized long-term profit.
Jobs wanted the iPad to represent a unique interface and experience that was distinct from a laptop. They failed to do that and the touchscreen is the only difference that remains. Merging these products is only likely if they doesn't reduce overall expenditure on Apple products in the long-term.
If you look at the development of the iPad UI over the past 2-3 years it's clearly converging more and more with laptops, rather than trying to differentiate itself. The differences between a 12.9 inch iPad Pro with a Magic Keyboard and a MacBook Air are getting fewer and fewer with each OS update.
Jobs wanted the iPad to represent a unique interface and experience that was distinct from a laptop. They failed to do that and the touchscreen is the only difference that remains. Merging these products is only likely if they doesn't reduce overall expenditure on Apple products in the long-term.
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