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It seemed like everything was going so well. Holiday mall traffic was said to be brisk, consumer sentiment seemed to be thawing a bit, even the unemployment numbers made a U-turn just before critical mass and started heading nicely downward. Then came reports of exceptions to the general rule of an improving U.S. consumer economy in Q4 2011, most notably from big-box retailer Best Buy, which reported lower same-store unit sales for the quarter and flat revenue.

So what happened; did a piece of the sky fall and someone forget to blog about it? Some clues came this morning from analyst firm NPD Group, which reported a 6% overall drop in holiday consumer electronics sales compared to the same period in 2010. Sales were sharply lower for MP3 players, digital picture frames, point-and-shoot... whoa, whoa, wait a second! MP3 players? What decade are we talking about again?

A low-profile Silicon Valley startup beat Microsoft in delivering an application that allows users to access MS Office documents on their iPads.

CloudOn launched its eponymous iPad app Tuesday. Working in conjunction with DropBox, CloudOn lets users access and create MS Word, Excel and Powerpoint documents on their tablets. Unlike CitirixReceiver and other desktop access apps, CloudOn is designed to work specifically and only with Office.

Microsoft originally said it would try to take on Apple's iWork suite of productivity applications by developing an iPad app when the original device was first introduced. By the time it was launched in 2010, however, Microsoft had changed its mind. In November, citing unnamed sources, The Daily reported that Microsoft planned to launch an iPad Office app in the first half of 2012.

The memo has already gone out to the various book editors, news editors and technology analysts: The proper phrase is not "tablet PC" any more. A tablet and a PC are perceived by both consumers and businesses as two separate classes of device. You probably saw the TV ads this season where Santa's elves kicked out the 4G smartphones and tablets, and dispensed with the old gifts nobody wants. "Bye, bye, computer," the elves sang to an old Johnny Mathis tune.

Since its very inception, Microsoft's business model has been about leverage. It uses its established foundation in one popular platform to extend another. The advance of the tablet had been announced further ahead of time than Margaret Thatcher announced the surge on the Falklands. It's not like Microsoft didn't see this coming. But in 20/20 hindsight, it's remarkable to see now how the company appears to have actively worked to thwart that advance, to slow it down, by introducing potential form factors that could deflect interest in tablets - for example, an embedded device that could reveal the weather forecast and present your e-mails, that could be sewn to one's luggage.

As part of its ongoing sponsored research into mobile computing habits, Google released some interesting findings about the way consumers use their different devices. Google refers to the tablet as a "third digital screen in consumer's lives that fill[s] the gap between desktops and smartphones." Its study found that people use tablets for personal rather than work-related activities 91% of the time.

Google found that users quickly migrate entertainment activities over to their tablets when they get them. They use tablets for longer sessions on weekends than on weekdays. And 42% of the time, people are using tablets to multitask, especially in front of the TV, and even while eating or cooking.

People didn't understand the iPad immediately. No one believed in the form factor. "Just a big iPhone," people called it. But it caught on, it took off, and now consumers can't let go of their tablets. The intimate, intuitive interface has created its own use case. People curl up with the device and they read.

Publishers and app developers have provided a bonanza of ways to read on the iPad and iPhone. Some are free, some cost money, some require monthly subscriptions. All of them are vying for your attention in that new, valuable hour or two of tablet time in the evenings. But one app, Instapaper, sits in the iPad Hall of Fame on iTunes, pushing forward reader behavior just like the iPad itself. Marco Arment, creator of Instapaper, answered some questions for us about where this is all heading.

A new infographic published by Monetate pinpoints a key finding: Conversion rates are higher for tablet buyers than desktop buyers.

Is this surprising? Not in the least.

In September 2011 alone, nearly half of tablet owners made purchases on their devices. Already 12% of the Internet-using U.S. owns a tablet and, according to Forrester, "tablet users in the U.S. are estimated to grow at a compound annual growth rate (CAGR) of 51% from 2010 to 2015."

Take a look at the infographic after the jump.

According to new data from comScore, 6.8% of Web traffic in the U.S. comes from "non-computer" devices such as smartphones and tablets. This is an increase from 6.2% in the previous quarter.

Phones account for the majority of non-computer traffic. Mobile devices drive 4.4% of total digital traffic, tablets contribute 1.9%, and other non-computer devices send 0.5% of traffic.

For the better part of the last year, rumors have been swirling around the possibility of Amazon launching its own tablet computer. For nearly as long, the device has been touted as a potential challenger to Apple's iPad, which remains overwhelmingly dominant in the space.

This morning, Amazon's tablet was finally unveiled. Should Apple be concerned?

Amazon just announced the Kindle Fire. It's a Wi-Fi only, 7-inch tablet with a full-color, backlit, 1024x600 IPS touchscreen (video). It has a dual-core processor, and it weighs 14.6 ounces. It looks like a BlackBerry PlayBook. The resemblance is not an accident; as Ryan Block at gdgt reported on Monday, the same original design manufacturer (ODM) - Quanta Computer of Taiwan - made both, and Amazon's Kindle team used the PlayBook's hardware as a template.

But the similarities end there. The software is a custom fork of Android that has Amazon's own feel, and it puts Amazon's vast catalogues of digital content at users' fingertips. In addition to the Kindle reader app, it offers Amazon's Cloud Player for music, and Instant Video Player for TV and movies. It comes with a 30-day free trial of Amazon Prime, and it ships with Amazon's own Android Appstore, rather than Google's. With Android as the starting point, Amazon has built its own tablet experience on top of it. At $199, the Fire is now the top of the Kindle line. It ships November 15.

Amazon issued a press release moments ago that may put to rest rumors of a tablet thought to be forthcoming from the e-retailing giant.

The company is holding an invite-only event in New York on September 28 but they are not saying what the event is about.