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Apple's Rumored Tablet Makes Sense, But Faces Challenges

Posted by: Arik Hesseldahl on July 13

The rumors about an Apple tablet device continue to gain strength, and the fact is they make perfect sense.

With the iPhone still selling at a healthy clip, and Mac sales still going strong, Apple will be under growing pressure to bring out a new class of product to keep its revenue base growing. The latest indications that a tablet, a device that’s larger and presumably more powerful than the iPod touch, but not quite as large or powerful as a full-fledged notebook is in the offing, at least according to reports that surfaced in Taiwanese media. Contract manufacturers Foxconn, and two others, Wintek and Dynapak have received orders for the device, according to reports in Information Times. (Here’s a link to a translation of the original report.)

Such a device would fit logically in Apple’s product lineup and as Spencer Ante and I reported in April, there are people in the wireless industry who’ve seen just such a device. Now that the iPod touch has proven itself so useful as an Internet device, it makes perfect sense for Apple to offer one that sports a larger screen and perhaps some improved features, like a more robust Web browser, and maybe a front-facing camera for video chats. I like my iPod touch so much I keep it on my bedside table for checking email, the weather and as an iTunes remote. A bigger screen might make it better for reading, and so conceivably give Apple a more complete answer to Amazon’s Kindle e-reader device.

But there are many questions I have about it. For instance: Will it be more closely related to the iPhone or the Mac? Will it be, for all intents and purposes a larger iPod touch? Or will it do more? Consider for a moment: Apple’s MacBooks all sport front-facing cameras for video chats. This handheld could conceivably do the same thing, and thus open the door to video chats via iChat or Skype.

One important factor will be the cost of the display. If as one could reasonably expect, Apple uses a multi-touch interface similar to that found on the iPhone and the iPod touch, it would be both wondrous to use but expensive to build.

That’s going to force Apple to strike a difficult cost balance. I have some serious doubts that consumers are going to pay Mac-like prices for this gadget. A research note from Gene Munster at PiperJaffray added to the chatter. Having spoken to a Taiwanese component supplier that he declined to name, he wrote that he continues “to believe that Apple will launch a tablet, not a Netbook, by early calendar year 2010,” and that he believes it will be priced in the $500 to $700 range.

That price range is too high for a few reasons. If this tablet is not a personal computer, then it is, by a reasonable argument something less than a personal computer. As such, in the mind of many consumers, it should be priced at a level below that of the cheapest personal computer, in this case, the Mac Mini, which starts $599, only $200 more and the highest-end iPod touch, at $399. Knock the price of the that iPod touch to $250 or so, and the sweet spot price for this tablet becomes apparent: $400 to $450.

But can Apple build such a tablet and sell it at that price profitably? The key hurdle is going to be the display. The 3.5-inch multi-touch display module is the second most costly component in the iPhone 3GS, according to an iSuppli teardown analysis done last month, and is estimated to add $19.25 to the iPhone’s bill of materials. And the cost isn’t coming down, says Vinita Jakhanwal, an
iSuppli analyst. “The pricing hasn’t yet come down to commodity levels, and so there will be significant costs if the size of that display grows to five or seven inches,” she says.

A doubling of the display size doesn¹t necessarily indicate a simple doubling of the cost of the display she says. It might cost more to manufacture. A bigger screen might require more powerful chips to drive it pushing the materials cost on the device even higher. That in mind, she suggests that Apple might opt to go grow the size of the screen to only about 5 inches. “It makes for a more logical progression,” she says.

And the most likely timing for such a release? I’d say September. As I’ve noted before, Apple has released a new iPod during the fall in every year since 2005.

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Reader Comments

Bill

July 13, 2009 08:37 PM

Makes sense if it replaces the QWERTY with the Phraze-It keyboard.

Bill

July 13, 2009 08:37 PM

Makes sense if it replaces the QWERTY with the Phraze-It keyboard.

Mark U.

July 13, 2009 10:45 PM

C'mon now, Arik. If Apple introduces a tablet for $800, it will sell as many of them as it can make. Surely you know this. Because (a) it's from Apple; and (b) there won't be anything like it on the market when it comes out. Apple doesn't open markets by introducing cheap devices, it opens markets by introducing great devices, which makes the price less relevant. As other entrants join the market it then leverages its manufacturing and marketing lead to bring the price down over time. We've seen this over and over from Apple, and odds are we'll see it again when and if a tablet ships.

Dane Baker

July 13, 2009 11:12 PM

So without any idea of what this mysterious device will do, you've decided that a $500-$700 price range is "too expensive." With respect you don't know what you're talking about. Apple charges premium prices and in most cases, justifies them. If they didn't, they wouldn't be as successful.

Nate Bird

July 13, 2009 11:16 PM

I agree with Mark. Apple never introduces a cheap product. Even the iPhones and iPods were $500 when they were first released.

I believe the screen size to be larger than smaller and run a full fledged Mac OS X Snow Leopard. I don't believe they'll break the OS into yet another type just for the tablet unless they make it OS X Touch or something and plan on a larger product line and integration with Macs eventually. Oh, I hear the screen size will be about 9.6 inches. That sounds about right. Touch screen and all.

The price is going to be around $800-$1000. It's Apple. It is not going to be cheap to make, not going to be cheap build quality and it is going to do a lot more than be an ebook reader. At least $800. Apple doesn't skimp on components. They set a high standard and reduce costs from there. The size rarely increases and the power always goes up.

As far as challenges, they face the same as Microsoft's failed tablet initiatives except they have the touch technology instead of crappy styluses. It is all in the implementation and the market. I don't see how I would "need" one but maybe Steve can convince me.

Release date? NOT September. This is not an iPod. I don't know why you even think that is realistic. October at the earliest. iPods and Snow Leopard in September. They won't release yet another product. October will bring new iMacs for the holidays and then a cool announcement around the 22nd of October just to piss Microsoft off.

Joe

July 14, 2009 02:32 AM

I see this as a market killer

10" screen; cosmetics like the iPhone and MBPs (silver outside on a black face); with the live TV streaming now available to iPhone and iTouch users, can we say Duh! regarding what this new platform will do, not to mention what the others have said here, re iChat and video conferencing. The touch screen is likely to be the most expensive part and alone may add $100 to the component list, but can you see a keypad that appears with a double tap and disappears with another double tap?

this product is so Apple, that it hurts

If available by the Christmas buying season, it will easily sell 3 million and evoke riots when shoppers fight over the last three in each store on the 24th of December

My guess is that it will weigh in at 1.5 pounds; for those who find that the MBA is too heavy, then this is the perfect, gotta-have-my-internet-with-me-at-all-times devcie and thus complete the size gap between the iPhone/iTouch and the MBA which, by the way may soon have a 15" big brother (OLED, 256GB SSD) and ? (we can hope) sport a USB3 port, thus killing Firewire 800

Release date? I'm guessing October/November when they do the annual laptop refreshes

Just a few opinions from an old fool

Jan

July 14, 2009 06:04 AM

In Belgium, iPhones have to be sold unsubsidised. Prices are 575 euro (16GB) and 675 euro (32GB).
http://iphone3g.mobistar.be/en/index.cfm

I don't think a tablet can be sold within 200 euro of this price, so it will be close to 1000 euro (the price of a white MacBook).

Drew

July 14, 2009 08:27 AM

Can you please refrain from writing articles that do not provide substance?
Anybody can spew a monthly crystal bal statement - it just doesn't yield anything worth reading.

Breno Neri

July 14, 2009 09:55 AM

Come on, $400? This is not gonna happen!
If Apple delivers an "iPhone"-thin "Kindle DX"-sized touch screen iTablet for $800, it'll sell like bottled water on a sunny day! I'd buy one on the release day myself.

Paul Lustgarten

July 14, 2009 10:00 AM

Your reasoning about the price window is fundamentally flawed, in that the comparison point is NOT a DESKTOP machine (the Mini)!!

Rather, this new device will fit in at a price point $150-$200 less than the lowest-priced PORTABLE computer, that being the low-end MacBook, at $999. So expect a price in the $750-800 range ... much like others here are suggesting, by other reasoning.

And, at this point, there's a lot (well, enough) room to accommodate the costs necessary to provide a good screen & associated supporting circuitry.

Jordan

July 14, 2009 11:40 AM

I agree with Paul L. the mini is a very poor choice for a comparison, as it also doesn't come with a monitor.

Vlad

July 14, 2009 12:27 PM

I would concur with most of the commentaries, you are way off on both price and specs.

There are few offers of 8 to 12 inch screen laptops with touch screen interface both in around $1000 price tag (HP, Lenovo and Fujitsu). We're talking about fully qualified laptops with rotating screen and QWERTY keyboards. If Apple will release the tablet, it most likely will beat these guys by a margin. Therefore, here's my estimate:
10 to 12 inch screen
$1100 to $1400 price tag
hardware similar to one found in Mac Anorexic (a.k.a. Macbook Air) or one step shorter of that
release date - Spring/Summer 2010

Just my 2 cents

Allie

July 14, 2009 01:44 PM

Demand Evolution has already released their 50" multi touch screen kit AND their 30" LCD screen - No rumors there...I wonder when Apple will catch up.

Allie

July 14, 2009 01:44 PM

Demand Evolution has already released their 50" multi touch screen kit AND their 30" LCD screen - No rumors there...I wonder when Apple will catch up.

http://www.youtube.com/demandevolution#play/all/uploads-all/0/u-2bdoYzZvY

davesmall

July 14, 2009 02:18 PM

Since this is all speculation I'll toss in my ideas. Hmmm - Let me imagine a tablet computer that would make sense and really add some value.

Start with a 13" MacBook Pro or a MacBook Air to visualize the kind of overall quality I have in mind. Now make the lid detachable. When detached the lid becomes a tablet computer running the iPhone version of OS X with touch Keypad. When attached the computer runs the regular version of OS X with physical keyboard and ability to run all applications such as Photoshop, etc. Both versions of the OS can coexist and run simultaneously using virtualization. In other words, the detached lid works like a giant iPod Touch but morfs into a full-featured computer with the complete OS X when attached to the bottom unit and keyboard.

Connect the base to the lid with Bluetooth. Put some semiconductor storage in the lid and a big hard disk in the base. You'll need one of those non-user changeable long-life Apple batteries in each unit.

When riding in an airplane put the base in overhead storage and use the lid as a tablet on your tray table. Save files to disk wirelessly using Bluetooth.

Make the lid capable of tethering to the (3G) internet via the iPhone. Sell tethering as part of the deal when you offer the computer for sale.

So you're in a restaurant making a sales presentation to a client. The base (computer bottom) is in your briefcase alongside your chair. The presentation is stored there on the hard disk. The presentation is shown on the bright high res LED 1280 X1024 display on your tablet/lid. You are connected to the internet via tethering to your iPhone. You can also use your iPhone as a remote control for the slide presentation.

A product like this could be sold in pieces. Buy the lid as a huge iPod Touch. Buy the base later with keyboard, hard disk, and SuperDrive to convert to a full fledged laptop. Buy an iPhone to get Internet tethering via 3G.

It is important that it be able to run iPhone Apps so it can piggy-back on the amazing App Store. But it wouldn't have to run that version of OS X exclusively thanks to virtualization.

davesmall

July 14, 2009 02:22 PM

Since this is all speculation I'll toss in my ideas. Hmmm - Let me imagine a tablet computer that would make sense and really add some value.

Start with a 13" MacBook Pro or a MacBook Air to visualize the kind of overall quality I have in mind. Now make the lid detachable. When detached the lid becomes a tablet computer running the iPhone version of OS X with touch Keypad. When attached the computer runs the regular version of OS X with physical keyboard and ability to run all applications such as Photoshop, etc. Both versions of the OS can coexist and run simultaneously using virtualization. In other words, the detached lid works like a giant iPod Touch but morfs into a full-featured computer with the complete OS X when attached to the bottom unit and keyboard.

Connect the base to the lid with Bluetooth. Put some semiconductor storage in the lid and a big hard disk in the base. You'll need one of those non-user changeable long-life Apple batteries in each unit.

When riding in an airplane put the base in overhead storage and use the lid as a tablet on your tray table. Save files to disk wirelessly using Bluetooth.

Make the lid capable of tethering to the (3G) internet via the iPhone. Sell tethering as part of the deal when you offer the computer for sale.

So you're in a restaurant making a sales presentation to a client. The base (computer bottom) is in your briefcase alongside your chair. Your presentation is stored there on the hard disk. The presentation is to be displayed on the bright high res LED 1280 X1024 display on your tablet and sent from disk via Bluetooth. You are connected to the internet via tethering to your iPhone. You will also use your iPhone as a remote control for the slide presentation.

A product like this could be sold in pieces. Buy the lid as a huge iPod Touch. Buy the base later with keyboard, hard disk, and SuperDrive to convert to a full fledged laptop. Buy an iPhone to get Internet tethering via 3G.

It is important that it be able to run iPhone Apps so it can piggy-back on the amazing App Store. But it wouldn't have to run that version of OS X exclusively thanks to virtualization.

Webster Phreaky

July 14, 2009 06:16 PM

crAPPLE .... as ALWAYS - LATE TO MARKET, COPY EVERYONE ELSE, Take Credit for What Others DID FIRST - AppleTards Gush and Faint like little Troll Pansies.

Webster Phreaky

July 14, 2009 06:18 PM

crAPPLE .... as ALWAYS - LATE TO MARKET, COPY EVERYONE ELSE, Take Credit for What Others DID FIRST the Great iNOvator- AppleTards Gush and Faint like little Troll Pansies.

cy cabell

July 14, 2009 11:02 PM

The big draw back that I see with an iPod Touch-like platform is that it is dependent on a WiFi connection. The reason I love my iPhone is because I can get connected anywhere at anytime. This device, selling at $799.95 will sell like hotcakes--but in today's iPhone 3G S world, it will have to offer "anytime" connectivity. I'm ready for mine!

Cy Cabell

July 14, 2009 11:04 PM

The big draw back that I see with an iPod Touch-like platform is that it is dependent on a WiFi connection. The reason I love my iPhone is because I can get connected anywhere at anytime. This device, selling at $799.95 will sell like hotcakes--but in today's iPhone 3G S world, it will have to offer "anytime" connectivity. I'm ready for mine!

Nowhereman

July 15, 2009 12:01 AM

That's amazing.
Amazing because I designed a desk top / tablet system for Sun Micro in the late 80s.
They never embraced it; ( couldn't understand it's potential maybe)
Now Tablet devices are being looked at with a more serious eye.
Hmmm, let me see here.....

Steven

July 15, 2009 06:00 AM

There is nothing that says that this device has to be priced less than the Mini. The Mini is a desktop without a monitor or keyboard. It does not benefit from having multitouch features or any degree of portability. There is no basis of comparison here. Therefore, I don't believe that the rumored device will suffer any constraints imposed by the Mini, price or otherwise.

The more likely comparison will be to the Macbook, both in price and capabilities. Also, if millions of early adopters were willing to pay the "Mac-like price" of $600 for the original iPhone, you have to believe that this thing will go like hotcakes in the $500-$700 range.

There is pressure on Apple to deliver here. It's continued derision of the netbook means that this new device must be something so far beyond netbooks that folks are be willing to pay twice the price. That means this thing must be much more than an iPod touch on 'roids. Multitouch is a required feature, and I don't believe that Apple will place the kind of pressure on its margins which would be required to sell it for less than $500.

Steven

July 15, 2009 06:00 AM

There is nothing that says that this device has to be priced less than the Mini. The Mini is a desktop without a monitor or keyboard. It does not benefit from having multitouch features or any degree of portability. There is no basis of comparison here. Therefore, I don't believe that the rumored device will suffer any constraints imposed by the Mini, price or otherwise.

The more likely comparison will be to the Macbook, both in price and capabilities. Also, if millions of early adopters were willing to pay the "Mac-like price" of $600 for the original iPhone, you have to believe that this thing will go like hotcakes in the $500-$700 range.

There is pressure on Apple to deliver here. It's continued derision of the netbook means that this new device must be something so far beyond netbooks that folks are be willing to pay twice the price. That means this thing must be much more than an iPod touch on 'roids. Multitouch is a required feature, and I don't believe that Apple will place the kind of pressure on its margins which would be required to sell it for less than $500.

Steven

July 15, 2009 06:28 AM

There is nothing that says that this device has to be priced less than the Mini. The Mini is a desktop without a monitor or keyboard. It does not benefit from having multitouch features or any degree of portability. There is no basis of comparison here. Therefore, I don't believe that the rumored device will suffer any constraints imposed by the Mini, price or otherwise.

The more likely comparison will be to the Macbook, both in price and capabilities. Also, if millions of early adopters were willing to pay the "Mac-like price" of $600 for the original iPhone, you have to believe that this thing will go like hotcakes in the $500-$700 range.

There is pressure on Apple to deliver here. It's continued derision of the netbook means that this new device must be something so far beyond netbooks that folks are be willing to pay twice the price. That means this thing must be much more than an iPod touch on 'roids. Multitouch is a required feature, and I don't believe that Apple will place the kind of pressure on its margins which would be required to sell it for less than $500.

Bad Fly

July 15, 2009 12:04 PM

There must be something fundamentally wrong with this site to warrant all of the double posts.

Sam Siphandone

July 15, 2009 01:42 PM

$500 is still expensive... Nobody buys it expect those Mac die-hards.

123xyz

July 15, 2009 05:45 PM

I want a very light web-only + I-pod + cellphone + broadcast TV with a 13" LED back lite device. Don't care if it's an Apple or not.

Steven

July 15, 2009 11:13 PM

Sorry for the triple post. After submission, the screen refreshes but you get no indication that your post was received or is being reviewed or anything. Since I am at work using a crappy Dell with a version of IE which IT hasn't updated in years, I just assumed my post was floating around somewhere in Windows purgatory, so I resubmitted it. Again, so sorry.

And Sam, Macs would not be selling so well if only "Mac die-hards" were buying them. Expect this thing to sell well at a plus-$500 price point.

Mike

July 17, 2009 11:07 AM

I paid $1000 for my first Newton in the early 90s when a grand was real money.
$800 for an iPad or whatever the wiz kids in Cupertino call this thing is an easy sale for me. It fulfills the dream of a simple portable, yet big enough COLOR screen tablet. eBooks, music, the Net, I'm there. When can I pay my $800 for it at the Apple store?

Peter

July 18, 2009 07:19 AM

I see this device as a scaled up iPod touch with enough pixels to view a full web page. I've had an iPod Touch for over a year and I love it. I also have a Kindle 2 I don't love. Scale up the screen, add bluetooth for serious keyboarding, etc. and it will replace my lap top and my Kindle because it would be light enough to use anywhere, standing, sitting, in bed, etc. That would be worth $1000 easily.

mjw149

July 20, 2009 01:22 PM

I'm a skeptical one, because the size.

It's not pocketable, and it's not as useful as a cheap notebook. And pretty soon, everything we want to do in that in-between spot will be covered by e-books and TVs. What's the killer app for a tablet? not a game, not watching portable TV- that market has never been large. not blogs that can be read on a $300 kindle.

zhangdan

July 20, 2009 11:17 PM

Paul

July 21, 2009 09:40 PM

The article left out the most critical bit of info. Will it be for Verizon as rumored? There is no way i will buy this if its released on At&t.

bob

July 23, 2009 09:34 AM

NO TABLET

apple wont release a tablet for a while (hopefully im wrong tho)
think about this: it would need more cpu than ipod and iphone yet to keep it small about as much or less than macbook air (worst apple product available). what wud it run? the OS used on ipods and iphone? dont think so cos that wud make the apps in the app store useless (unless scaled which reduces quality - something apple wont do). the resolution needed wud be more since it hasd a bigger screen. so if the resolution increases it will likely run OS leopard which wud hv to be modified for touchscreens. but with little processing power the performance wud not be v gud. ok then wat about memory? less than macbook air and more than 32gb so about 80gb or 64gb ssd which is less than ipod classic and probably next gen ipod touch will get 64gb bcos ipod touchs usually hv had a memory upgrade and then iphone has followed. also it will need usb slot(s) and these need to be fitted on a device smaller than macbook air??? it wont be pocketable and it will cost more than cheaper substitutes which can do more.
what about the claims of seeing touchscreen apple tablet seen on web? look at axiotron modbooks.

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A blog on the daily doings of Apple and the many companies in its orbit, with insight and analysis by two longtime Apple-watchers BusinessWeek Senior Writer Peter Burrows and BusinessWeek.com Senior Technology Writer Arik Hesseldahl.

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