Here's what I feel...

1) Individuals have different needs. Hence, when they get a device, it will need to suit them. However, its hard to find a single device that will suit perfectly...hence, the next best thing is to get one that covers the most bases.

2) Depending on what those bases are, a device that can do the most at a comfortable price point will probably get the widest base of users.

3) The N800 is about $650 Singapore dollars (here in Singapore). The closest competitor in price alone would possibly be some WM5/WM6 Mobile Phone or one of Nokia's S60 phones.

4) But if you consider other factors like screen real estate and browsing, then the next closest in price would be a UMPC (eg. Kohjinsha SA1) or Toshiba G900 mobile phone (expensive). Windows XP and WM6 OS respectively. Huge base of applications, some freeware, some shareware etc. BTW, software like Navicore and Rhapsody aren't exactly free, so not all Linux-based software is free. BUT, paid stuff doesn't mean it isn't good. These are not exactly pocketable.

5) So are they competing in the same market? I think so. As long as you are able to convince a typical user to switch from one device to another (that means, that user's decision may sway), that means they are competing. One can define to a great extent and argue that the markets are not the same, but frankly, we have to look at the typical user. Unless, the device states outright...for folks with linux knowledge recommended...or something like that. Otherwise they are competing for the same target audience.