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Rumors Emerge That Apple Tablet Is Delayed

Posted by: Arik Hesseldahl on November 19, 2009

Taiwan’s DigiTimes is reporting today that Apple has decided to postpone the launch of its pending tablet product until the second half of 2010.

The main reason for the supposed delay is switch in the displays being used: Apple, the report says, wants to use a 9.7-inch Organic Liquid Crystal Display (OLED) on the device, that costs about $500 from the manufacturer, said to be South Korea’s LG Electronics. A display at that cost would push the tablet’s final price into the $1,500 to $1,700 range, too high for most consumers.

The report goes on to suggest that Apple is planning two tablet models, one with a 9.7-inch display, another with a 10.6-inch display.

Since costs on the display are coming down fast, waiting until the second half of the year will help Apple sell the tablet at lower price, in the $1,200 to $1,500 range, the report says.

These prices are of course higher than what we’ve previously heard. I’ve been assuming that the final price would come out to below $1,000, between the price of the least expensive MacBook and the iPod touch, say about $700 to $800.

I’m not the only one who’s been thinking this way. Gene Munster of PiperJaffray is out with a research note today on the heels of the DigiTimes report and says first and foremost that Apple investors shouldn’t worry about this reported delay, primarily because most analysts haven’t factored the tablet into their Apple forecast models for 2010. And if Apple were to release a tablet on Sept. 1, 2010, Munster assumes Apple would sell about 650,000 units at an average selling price of $600. That would amount to a 1% increase in revenue.

If you take the iPhone 3GS as a starting point, its bill-of-materials cost is about $179 according to iSuppli estimates, Munster says. If you take out the iPhone functions, you’re left with a BOM of $160. Then if you assume the display is three times the size of the iPod touch, you reach a BOM estimate of about $480. From there you have to work in Apple’s distribution, retail margin and other factors to arrive at a final price. “The piece for retail pricing that is unclear are Apple’s retail margin expectations around the tablet. We believe Apple will price the tablet to compete in the netbook market at the expense of margin,” Munster writes.

He’s maintaining his overweight rating on Apple stock and his $277 price target based on a multiple of 25 times Apple’s estimated FY 2010 GAAP earnings per share of $11.10. This morning Apple is trading down nearly $4 or nearly 2% at $202.50.

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Reader Comments

Perry Clease

November 19, 2009 10:51 AM

Is this rumor just a way to manipulate AAPL which dropped $4 a share since opening this morning?

mattC

November 19, 2009 01:34 PM

what on earth makes you think there is a linear relationship between the price of a screen and its size? And in a totally different (OLED) technology? That's the sort of mistake I'd expect a high school econ student to make. Shame.

Potata

November 19, 2009 01:41 PM

Why would I pay 1500 to 1700 for a 10.6 in. tablet, when i can pay that for a much more powerful Macbook Pro?

Tom D

November 19, 2009 03:27 PM

If the information on pricing is correct then that means that Apple is addressing a different market than everyone has assumed and that it may risk cannibalizing its laptop sales. In fact, this information would indicate that the tablet is a revised member of the MacBook laptop family and not playing in the Netbook, E-Reader field at all.

Toby

November 19, 2009 04:41 PM

The tablet market is small and fractious at best. There are some vertically integrated uses, but those are likely to belong to specialty manufacturers at the low end of the price scale.

Apple may be intending to create a new market segment, something they are pretty good at, but at $1200 it will likely have very limited consumer appeal. Even as a reader (ala Kindle) it is still too expensive.

Eric

November 19, 2009 06:04 PM

How can something that doesn't exist be delayed? Vaporware in the end is just that. Until the Apple store goes down and someone in a black turtle neck tells me I need one of these, I refuse to read any more tablet tom foolery.

LarryRac

November 19, 2009 06:58 PM

Please please people. This Apple "Kindle like" device is a smoke screen. Steve and Apple are just too far beyond all of it. Take a look at the facts and string them together. Apple's monster data center in North Carolina, the switch to an OLED screen, the need to revamp Apple TV, the revenue to buy an online movie rental company or gaming company or both...... what do you get? Hell I don't know but Apple will rewrite an industry like it has in the past with something so innovative and fresh that the competition will look like their standing in the wake of a entertainment revolution!

LarryRac

November 19, 2009 06:58 PM

Please please people. This Apple "Kindle like" device is a smoke screen. Steve and Apple are just too far beyond all of it. Take a look at the facts and string them together. Apple's monster data center in North Carolina, the switch to an OLED screen, the need to revamp Apple TV, the revenue to buy an online movie rental company or gaming company or both...... what do you get? Hell I don't know but Apple will rewrite an industry like it has in the past with something so innovative and fresh that the competition will look like their standing in the wake of a entertainment revolution!

siphandone

November 19, 2009 07:45 PM

It will be like Apple TV (niche) if this tablet costs more than $1000... I have iTouch but Apple won't get my $$$$ for this super over-priced gadget. I am in the market for a $250 netbook this Thanksgiving...

geoff

November 20, 2009 12:38 PM

My thoughts exactly. Its been pretty obvious that video content is what apple is after next. I would guess that thing will provide you with TV on the go via Wimax, LTE, DVB-T or something like that.

It might happen that the device also delivers print content but that will be secondary.

On top of which I would project that Apple will be providing digital lockers for all your purchased content, universal access to that content, and some sort of social media overlay.

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I am VERY VERY interested in the CrunchPad after seeing these prices.
I get the OLED. It can do print better than eInk given the immesurable real contrast. But, i would like a slate for my job. Price is king right now people.

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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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