Apple is likely to launch a tablet that's similar to the iPod Touch, but larger, in the first half of 2010, marking the company's entry into the netbook race, Piper Jaffray analyst Gene Munster says.
In a research note Thursday, Munster handicaps the gaps in Apple's product lineup. The gaping hole: there's nothing between the iPod Touch and the MacBook. Enter this iPod Touch on steroids for US$500 to US$700.
Apple Chief Operating Officer Tim Cook called Netbooks junky, but he never dismissed the consumer demand for them.
Between indications from our component contacts in Asia, recent patents relating to multi-touch sensitivity for more complex computing devices, comments from Tim Cook on the April 22nd conference call, and Apple's acquisition of P.A. Semi along with other recent chip-related hires, it is increasingly clear that Apple is investing more in its mobile computing franchise.
Specifically, we expect this to result in a larger (7-inch - 10-inch) touchscreen tablet that will launch in 1H CY10. Additionally, Apple's consistent message that it refuses to launch a "cheap" portable netbook, and its desire to differentiate itself in a maturing market before it's too late (similar to the timing of iPod and iPhone), plus its gradual addition of multi-touch technology to all of its core products (iPhones, iPods and Macs) leads us to conclude this product will be a touchscreen tablet (not a netbook).
Apple's game plan will revolve around its multitouch patents to cook up something different from your generic netbook. Munster's theory makes a lot of sense. A netbook would tarnish the Mac's average selling price and potentially cheapen the Apple brand. A tablet wouldn't. Double bonus: a Mac tablet would compete with Amazon.com's Kindle e-book reader.
What's the OS look like? Munster has an answer for that too:
We are anticipating a new category of Apple products with an operating system more robust than the iPhone's but optimized for multi-touch, unlike Mac OS X. The device's OS could bear a close resemblance to Apple's mobile OS and run App Store apps, or it could be a modified version of Mac OS X. We expect the development of such an OS to be underway currently, but its complexity, along with our conversations with a key company in the mobile space, leads us to believe it will not launch until CY10.
Is Apple too late to the game? Not really. Apple was late with the iPod, and we saw how that turned out. Ditto for the iPhone, which came five years after the first BlackBerry. Relatively speaking, Apple's Netbook killer would be a fast follow.
Here's a closer look at Munster's argument for a Mac tablet and not a netbook:
Why Not A Netbook?
• A low-cost netbook would serve to cheapen the Mac brand and lowers Mac ASPs (average selling price).
• A netbook with OS X on it would cannibalize MacBook sales, offering a new portable with OS X for a lower entry price. Apple could curb this effect by offering a slimmed down version of OS X without the iLife suite pre-installed, but we see this as unlikely, as its fully-featured approach, particularly with iLife and digital media, is a core selling point for the Mac brand.
• Perhaps most importantly, a netbook would not differentiate Apple's product from other netbooks entering the market, and as we have seen with the iPod and the iPhone, Apple prefers to enter a market once they can offer a significantly differentiated and often premium version of the product.
Why A Tablet?
• Component contacts in Asia suggesting there are no prototypes, but discussions about required components are underway.
• Recent patents relating to multi-touch sensitivity for more complex computing devices.
• Apple's acquisition of P.A. Semi along with other recent chip-related hires leads us to believe that Apple is investigating making its own chip for non-Mac mobile devices. We presuppose that Apple is content with its relationship with Intel, and decision to move the Mac platform to Intel based processors. We think the recent activity related to chips has more to do with development of a mobile device.
• Comments from Tim Cook on the April 22nd Conference Call. See quote below.
"Well, you know, for us, it is about doing great products. And when I look at what is being sold in the netbook space today, I see cramped keyboards, terrible software, junky hardware. Very small screens. And just not a consumer experience, and not something that we would put the Mac brand on, quite frankly. And so, it is not a space as it exists today, that we're interested in. Nor do we believe that customers in the long-term would be interested in. It is a segment we would choose not to play in.
"That said, we do look at the space and are interested to see how customers respond to it. People that want a small computer, so to speak, that does browsing and e-mail might want to buy an iPod Touch or they might want to buy an iPhone. So, we have other products to accomplish some of what people are buying netbooks for. So, in that particular way, we play on an indirect basis. Then, of course, if we find a way where we can deliver an innovative product that really makes a contribution, then we'll do that. We have some interesting ideas in the space."
This article was first published as a blog post on ZDNet.com.