Can the Apple Touch Sell the Tablet?

The Mac and iPhone maker may join a host of tech players hoping to win big in tablet PCs, an area where some of the industry's biggest names have failed

By Olga Kharif

Apple may be at the forefront of a renewed effort to bring back the tablet. Electronics manufacturers across the tech landscape are hard at work on their own versions of these flat-screen computers that let users input information via touchscreen rather than keyboard.

"There's no hotter topic [than tablets] in Asia right now," says Richard Doherty, a director at market researcher Envisioneering Group, who says Apple has developed prototypes of two different tablet machines—one that resembles a large-sized iPod, and another that features a larger display. Apple may launch one or both devices as early as September, Doherty says. A decision on whether and when Apple takes the tablet plunge lies with Apple CEO Steve Jobs, Doherty says.

Regardless of what Jobs decides, tablets are in the works elsewhere, including at Nokia (NOK), the world's largest maker of cell phones, and TechCrunch, a popular tech blog and information provider. Electronics makers Archos and Asus began selling new tablets earlier this year. And industry analysts say other makers of PCs, cell phones, and consumer electronics are quietly designing tablets aimed at mainstream consumers.

All these tablet hopefuls hope to succeed in an area where many tech titans have stumbled. Tablets have taken off in narrow niches, such as construction and nursing. Motion Computing makes a rugged touchscreen device that can be dropped and sanitized; it goes for more than $2,000 a pop.

But several other tech stalwarts, including Microsoft (MSFT), have failed to generate widespread enthusiasm for tablets. Sony (SNE) and Fujitsu (6702.T) released tablets in years past, only to phase them out later. In some cases, the devices were too expensive; in others they were awkward to handle. "Price was part of the story, and it wasn't quite so elegantly done," says Roger Kay, founder of consultant Endpoint Technologies Associates. Last year, U.S. tablet sales fell by 15% to 711,000 units amid the global recession, according to consultant IDC. They began to recover in the second quarter of 2009, thanks to an influx of federal stimulus money going into industries such as health care, where tablets are used.

An Apple Tablet for Less Than $700?

The addition of new players such as Apple, however, could help make these machines as popular as netbooks, the small and inexpensive laptop computers whose sales are expected to almost double this year, despite the recession.

So what's different this time around? Price, for starters. Apple's tablet may cost less than $700, analysts say. Then there's the Apple software mystique. "Apple has a real opportunity to take the magic of the iPhone interface and give that more real estate to do the tasks," Kay says. "It's an iPhone, but bigger. It's something that you know, but bigger." The device may be able to wirelessly access iTunes and Apple's App Store, which offers more than 65,000 apps such as games, e-books, and calendars. Apple declined to comment for this story.

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