Smartphones and tablets might seem like direct competition, but they definitely appeal to different users with different needs. Smartphones are typically lightweight, highly portable, and fairly quick, trading off screen size to accommodate size and weight. They are highly versatile, but mainly used as a communication device, whether it be via phone call, texting, or email.
Tablets are geared more as entertainment devices, although they do have other applications. They promote many of the same selling points as smartphones, but it is all a matter of scale. For example, the Thunderbolt weighs 164 grams (http://www.techoncept.com/overview-comparison-verizon-htc-thunderbolt-motorola-droid-bionic-iphone-4), while the XOOM weighs 730 grams (http://mediacenter.motorola.com/Fact-Sheets/Motorola-XOOM-Fact-Sheet-3537.aspx). For everyday communication use, the XOOM's larger size which accommodates heavier computing capabilities and larger viewing screen size, makes it unsuited for those same everyday pocket communication needs.
Both devices can be used as media devices for viewing movies, playing games, and surfing the web. They also make use of apps to further expand the usefulness of the devices. Almost all new smartphones and tablets have both front and rear cameras to accommodate videoconferencing via programs such as Skype. The devices just keep getting quicker as 4G rolls out across the country.
I just had the chance to play with the Motorola XOOM this past weekend, and wow. Just wow. It's quick, intuitive and practically anticipates your needs. With the Android 3.0 platform, Google addresses one of the problems that the iPad faced - apps that were not optimized for the new screen size and resolution. Android 3.0 not only solves that problem, but it also gives the XOOM more of a highly customizable computer desktop feel, rather than that of an oversized smartphone.
http://developer.android.com/sdk/android-3.0-highlights.html
http://cnettv.cnet.com/motorola-xoom/9742-1_53-50100722.html?tag=api
http://cnettv.cnet.com/htc-thunderbolt/9742-1_53-50098392.html?tag=api
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