Can the Apple Touch Sell the Tablet?

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businessweek.com/technology/content/apr2009/tc20090427_328264.htm">prototype devices is able to run all Mac applications, and allows for video and audio editing and graphic animation, Doherty says. Another, which looks like a larger iPod, lends itself to watching videos, playing games, and reading e-books.

Some manufacturers hope to put out tablets with access to app stores from Microsoft or Google (GOOG). Microsoft's upcoming Windows 7 software is expected to offer additional touch capabilities as well.

Nearly a dozen so-called kitchen tablets will be based on chips from Nvidia (NVDA), says Mike Rayfield, a general manager at the company. With touchscreens ranging from 7 to 13 inches, these devices can be posted in a room like the kitchen and let family members check recipes, wirelessly check the weather during breakfast, or send text messages that let teens know when dinner is ready. Costing less than $200, these devices may even come free with a service subscription from a wireless carrier. "There's a ramp-up of interest," Rayfield says. "Apple's had a lot of amazing successes [with devices like the iPhone], so now people say maybe this is the next place to go."

The Kindle Could Be Most Vulnerable

Chipmaker Qualcomm (QCOM), meanwhile, is helping several customers design tablets that let users read e-books, view high-definition movies, play 3D video games, and browse the Web, says Luis Pineda, a vice-president at the company. The new devices will feature 9- to 10-inch screens and be released as early as later this year, he says. "Going forward, we see the e-book [reader] expanding into a tablet-like device," Pineda says. A Qualcomm chip already enables wireless connectivity in Amazon's (AMZN) best-selling Kindle e-reader.

Fujitsu in April said its FLEPia, the world's first color e-reader, is available in Japan. Its 8-inch display can show up to 260,000 colors, and it allows for Web browsing and e-mail. The company hopes to sell 10,000 units this year and 40,000 in 2010 in Japan alone. "Global launch is definitely something we've been looking into, but the timing is yet to be decided," Fujitsu spokeswoman Nagisa Kuroda says in an e-mail.

If successful, the new tablets could steal some of the thunder now being kicked up by e-readers like the Kindle. "People will be making choices between this and the Kindle," says Rob Enderle, co-founder of consultancy Enderle Group. "It could take up to 60% of Kindle sales." Amazon spokeswoman Cinthia Portugal says, "We don't focus on other companies; we are focused on offering our customers the best possible reading experience."

If tablets take off, they could also erode sales of media players, smartphones, and netbooks. "They come in between smartphones and notebook computers, so they could cannibalize both," Enderle says. "But they are closer to smartphones, initially they are going to pull from the smartphone side." Perhaps for that reason, Nokia recently expanded its relationship with chipmaker Intel (INTC) to focus on development of software and devices that are a cross between a smartphone and a laptop. In August, Nokia received permission from the Federal Communications Commission to sell its newest tablet-like smartphone in the U.S.

Those are some big ifs, however. Even if Apple and other companies succeed in adding cool features at a lower price, they still face another hurdle: making it easy to input data without a traditional keyboard. Then there's the trick of generating wide appeal for a tablet—something no one in techdom has been able to master. "That's really the wild card," says Tom Mainelli, a senior research analyst at IDC.

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.

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