Shit, if this is true then it's no wonder the Newton never caught on.

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I don't think available software was the main problem for the early Newton. In fact, I think the success of the Palm demonstrates the opposite: the Palm is much less 'computer' than the Newton is. I'd say most people use the built-in apps almost exclusively, and it gets them right. It's got a great calendar and notebook which sync properly, and it's got an input method that's not going to make you want to pull your hair out - even if you don't happen to speak English. The first Newtons weren't very good in these respects, and I think that's what doomed them.