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Does an iTablet exist?

If you follow the technology industry gossip, you’ll have heard the rumors that Apple will release a next-generation tablet PC at the end of January (kind of like Moses bringing tablets with the word of God?)

Industry gossip, especially gossip about Apple, is notoriously bad as the many analysts out there oftentimes fail to understand Apple’s business and misread the things that they hear.

However, given the very precise supply chain reports out there (as well as the #2 exec at European telecom firm Orange’s announcement that they would be a partner with Apple), I am leaning towards believing this device exists.

Granted this is all speculation (and there’s a significant chance the industry is getting excited over nothing), and my good (and very intelligent) buddy Eric disagrees with me completely (for good reasons), but my thinking on the subject stems from three things:

  • A rapidly growing device category exists – When I first heard of the netbook category, I scoffed. After all, what is the difference between a netbook and a very cheap, underpowered notebook or an extremely powerful smartphone? However, as time went by, I was forced to eat my own words. There seemed to be an enormous appetite for such a device (as judged by the rapid growth rate of the netbook category) which didn’t seem to cut too deeply into notebook sales at all. Intel has even come on record as saying that netbooks are rarely bought, if ever, to replace notebooks! Whereas mobile phones are likely to replace portable media players (like iPods), it seemed that people were drawn to the idea of something in between a workhorse laptop and a smartphone to be used primarily to access the internet. This is also borne out by the booming growth in eReaders like Amazon’s Kindle which provide special interfaces, like special touchscreens and displays, which are tailored for casual internet browsing and reading. If there is a place for Apple to continue its rapid growth trajectory, a device category with specific technical needs and with potential for rapid growth like this in-between-smartphone-and-notebook eReader/tablet/netbook device would be it.
  • Clear room for user interface innovation – The current generations of netbooks and eReaders could use some significant improvement. Most netbooks don’t (yet) support a touchscreen interface and rarely sport a user interface that really wows. eReaders today predominantly depend on current generations of black-and-white-only e-Ink displays which suffer from a very slow page-change rate. The potential for someone with the hardware and UI design chops that Apple has to implement a new generation of display technology and provide a much needed refresh in the control scheme for these devices is enormous, and it fits with Apple’s history of changing how the industry and the consumer thought of products like the smartphone and portable media player (iPhone and iPod).
  • A vertical model fits – Apple’s standard strategy is to build strong end-to-end solutions that encompass hardware, software, and services in a neatly packaged product. This helps Apple maintain the quality of product experience, as well as extract extra profit by creating  a powerful “walled garden” which prevents other companies from seizing control of Apple’s key features and sources of revenue. Take the iPhone for instance – Apple has built the phone, designed the operating system, created an application and music store, and negotiated the proper service contract with a wireless carrier. It doesn’t get more “all in one/vertical” than that! Similarly, if a tablet emerges primarily as a means to get on the internet and read books/publications/blogs, there are a number of clear ways for Apple to “go vertical” – including adding an eBook store to iTunes, charging publishers a fee to distribute their products to “iTablet” owners, building a subscription model for content access, etc. This wouldn’t be an easy battle, but given Apple’s success with mobile phone applications and digital music, there’s plenty of precedent for seeing Apple expand its “content empire” to other forms of digital content.

Of course, there are a number of good reasons why this prediction might not wind up being true:

  • Apple doesn’t believe that the market opportunity is large enough. Is the growth in netbooks sustainable? Or just a product of the global recession pushing people to buy very cheap electronics? If Apple suspects its the latter, that would be a great reason to not distract management from more important tasks like maintaining or increasing its desktop/notebook market share or defending the iPhone’s market share against a growing Android threat (and potentially a resurgent Blackberry and Windows Mobile 7 threats).
  • Apple fears cannibalization. While Intel might view netbooks as a chance to sell more chips without interfering with its higher-end chips, Apple may fear that Apple notebook users, many of whom don’t need all the processing power that’s in their machines as they merely use them to surf the internet or watch movies/listen to music, will simply “trade down” and be tempted completely away from buying Apple’s higher end notebook models and hence jeopardizing Apple’s long-term growth and profitability.
  • Technological solutions to current problems aren’t mature enough. While the iPhone pushed the mobile phone industry, overnight, to adopt touchscreens, what is oftentimes not understood is that the touchscreen technology used by Apple has been around for quite some time (and were probably approved for use by Apple because they were mature). Many of the new display technologies to replace and/or improve on e-Ink are much less mature. If Apple has studied the problems facing current generations of tablet/netbook/ereaders and concluded that compelling solutions to them are still a year or two away, then, I believe that Apple would wait until they did come out to really storm the market.
  • Apple doesn’t think it can compete with a successful vertical model. If Apple felt it couldn’t use its standard playbook of providing services/content along with software and hardware, then that would be a big reason for Apple to not consider this mode. This could be because of the presence of large book-sellers like Barnes & Noble and Amazon in the eBook space (who do not allow non-Amazon/non-Barnes & Noble approved devices to access their digital libraries) or because of a powerful third party like Google which is already pushing one universal access platform for all eBooks. In my mind, this would be one of the biggest, if not the biggest, reason for Apple to think twice about entering the tablet/eReader space.

I’m glad my personal financial well-being doesn’t depend on me making the right call on this one :-), but push comes to shove, given the pretty-specific-supply-chain checks and the fact that I believe the threat of cannibalization and small market opportunity to be unlikely, I believe Apple will make this plunge, and I eagerly await to see how it will shape this new emerging device category.

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  1. There's no way that an Apple tablet doesn't exist after 9+ months of fucking rumors.

    The reoccurring theme during CES 2010 seemed to be that everyone wanted to get a tablet out, but no one made one that was compelling in the same way that the iPhone was compelling to Blackberry owners, or the iPod to Discman/random overpriced flash MP3 player owners. At best they were gimmicky (Lenovo's U1) at average they were well, average (HP's slate PC) and at worst they were horribly botched and poorly launched (Archos 9).

    I think it's unlikely that Apple's going to announce an e-reader because most of the rumors have been about touchscreen sizes at dimensions that are closer to a typical display form factor than an e-reader form factor (which tends to try and mimic the dimensions of the printed page).

    Everyone's waiting for Apple to make tablets a compelling product category (most likely with a UI that's designed so well you didn't realize you REALLY needed at tablet PC until you tried theirs) so that they can rip it off, add a few more features Apple didn't see fit to include, and sell their own version for $200 less. And by compelling product category, I mean “Something you can sell people that supplements, rather than replaces, your laptop AND smartphone”.

    Apple also has no qualms about butting in on the netbook market–they have absolutely refused to come out with a cheaper, barely functional laptop for several reasons, and the closest Mac option to the netbook form factor is the 12″ MacBook Air, which costs like 5x what your typical 2009 Atom-powered netbook does. So a tablet which doesn't replace the full notebook (like a netbook) but DOES fill the netbook need, at ~$700, would fit in just fine with the current market's product categories AND Apple's general pricing. It'll start out as a high-end user product first, just like the iPhone–something meant for the MacBook Pro/Mac Pro market rather than the MacBook market–and eventually grow a premium and entry-level (well, for Apple) model, probably subsidized with a cellular Internet contract.
    -pm (@pattheflip)

  2. Ben Ben

    There were rumors for way over 9+ months about an Apple netbook for last year which didn't turn out to be true :), but I think the supply chain checks and the Orange exec's leak pretty much point this to yes (I wrote most of this before the Orange leak :D)

    It's entirely possible Apple will launch a tablet “for the sake of launching one”, but given the associated hype and the way the iPod/iPhone playbook has done well while the Apple TV hasn't, I kind of doubt that's all there is to it. I think this will have to be some sort of vertical play, and it may just be a carrier-subsidized tablet, but I can't see what the tablet form factor gives you that's especially differentiating unless there is a content/functionality play as well — which is why I'm still bullish on the ebook idea.

    But we'll all find out in the next two weeks, anyways!

  3. The thing about Apple netbook rumors is that a netbook is about as un-Apple a product as you can imagine. There have been rumors about small, affordable Apple laptops since we were in middle school, and the closest they got was the eMate ($800 in 1998 for a Newton with a keyboard) and, eventually, the iBook line of consumer-oriented laptops (which later turned into the MacBook line) which have never been at all near another company's consumer line.

    I think the form factor of a tablet IS an advantage, but it's something that is hard to discuss in terms of features because to regular netbook/notebook users it feels like we're *losing* something (keyboard, optical drive, etc.). I think if it's done well, a tablet PC can be a device that is cheaper and more portable than a (Mac) laptop, offers a more comfortable Internet experience than a touchscreen smartphone, and offers a better media consumption experience (HD streaming video) than 2009's netbooks.

    In order to do that, the tablet needs a UI that feels responsive, roomy, and organic for a touchscreen–like the iPhone, but better. Something that won't make you miss your keyboard for the vast majority of the time you're using it.

    I suppose it could be that the Apple tablet's killer app is some kind of functionality which bridges the tablet world and the e-reader world, but I think it's unlikely because they're rarely first to market with that kind of tech.

    I doubt I'll spend the money on the gadget, whatever it is, because I'm a raging cheapass, but I can see where it could fit my computer usage patterns.

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