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Apple tablet: The next ‘it’ product?

Yes, there is a lot of buzz — maybe too much for some and not enough for others — about Apple's expected tablet. The reasons it's generating excitement vary, and it's not even clear whether everyone will want or need one — despite its Apple nameplate.

Yes, there is a lot of buzz — maybe too much for some and not enough for others — about Apple's expected tablet, which may be announced today. The reasons it's generating excitement vary, and it's not even clear whether everyone will want or need one — despite its Apple nameplate. 

"There really is no demand for tablets per se," said James McQuivey, Forrester Research principal analyst. "That’s the challenge for Apple. They have to create a new category, and it can’t just be like the last time — in 2001, 2002 — when tablets were created and were viewed as productivity devices."

Those early tablets "were going to make us really effective at work," he said. "Heaven knows that’s not something we all care about when we wake up in the morning. What we do care about is, how are we going to spend our idle time? How are we going to keep our busy minds occupied with interesting and fun things?" such as movies, TV, music and reading newspapers and magazines. "That’s where the Apple tablet is going to forge new ground."

McQuivey recalls a recent conversation with "a semiconductor maker, who said, 'We think that tablets are going to be Web browsers first and media devices second.' And I said no, the future of Web browsing is media consumption, and if Apple can make consuming media feel as elegant and as straightforward on this tablet as they have on the iPhone in the past, I think they have a shot at it."

Apple, he said, "isn’t thinking" of tablets as "selling laptops without keyboards," as other manufacturers do; "Apple sees this as a personal media experience that they can create."

Varied pricing?
With a still-shaky economy, how likely is it that consumers will spend $500, $700 or $1,000 — all rumored prices for Apple's tablet — for either a 7- or 10-inch display? Indications are pricing will not be one-size-fits-all, which could make it more appealing to potential buyers.

AT&T and Verizon Wireless have been mentioned as the wireless carriers that may sell the tablet, at a subsidized cost, in exchange for a monthly data fee and two-year-service contract. Consumers who want to buy the tablet and use it as a stand-alone wireless device, relying on their home Wi-Fi service or hot spots at coffee shops and airports, would pay more for the tablet itself.

"I think we’re coming out of an economy that’s pretty difficult for a lot of people, and we’re seeing a lot of people pay less for premium channels on TV, cut their home phone cords — a lot of behaviors where they’re throwing away these monthly plans," said Dmitriy Molchanov, Yankee Group analyst. "I think it will be difficult for Apple to convince people to sign up for an additional plan."

The arrangement could be similar to what AT&T, Verizon Wireless and Sprint have done with netbooks. The lightweight laptops are significantly less expensive, with most costing between $300 and $400 with no subsidy, and several are offered by carriers for around $200 with a contract.

Two recent surveys about an Apple tablet found that price does matter. ChangeWave Research, which surveyed 3,314 consumers this month, said there is "strong consumer interest" in an Apple tablet, and that 75 percent of those who are interested say they'd be "willing to pay $500 or more," and 37 percent say they would pay more than $700 for an Apple tablet.

Shopping site's survey of 500 consumers found that 70 percent of them said they will not spend more than $700 for an Apple tablet. Also, 44 percent said they would not buy such a device if it requires a monthly data plan for Internet access.

"You need to realize, Apple’s goal isn’t to sell 20 million of these to the mass market this year," said McQuivey. "They’ll price for the 3 million people they hope will buy one this year," and drop the price over time to get more buyers, as they did with the iPod and later with the iPhone."

Different than netbooks, e-readers
Netbooks — and some of the tablets announced earlier this month at the Consumer Electronics Show in Las Vegas — can offer Web surfing and video; why would Apple's tablet be different?

Tablets themselves are "more geared toward media consumption," said Ross Rubin, director of industry analysis for The NPD Group research firm. "People have discovered that the iPod Touch is a pretty handy device with broad functionality, even at home, and could benefit from a larger screen for watching videos and browsing the Web."

Still, he notes, "there are only a few usage scenarios that tablets are exceptionally well-suited for today — perched on the exercise bike rack or dangling off the headrest for rear-seat video."

Molchanov believes e-readers — which are becoming as plentiful as netbooks; almost everyone, it seems, is making one now — will continue to thrive even with an Apple tablet or other tablets in the marketplace.

Timing is 'so critical'
"Some people assume if you have an Apple tablet, you also won’t have an e-reader," he said. "I think that’s a misguided assumption. We’re seeing a lot of evidence that even if people who have a multipurpose device that can do a lot of different things, they really prefer a single-purpose device that can do one thing very well."

As examples, he cites digital cameras and digital music players. "People will always continue to buy digital cameras, even though they have cameras on their phones, and people will always buy MP3 players, dedicated to music playing, even though they have MP3 players on their phones as well," he said.

"The Apple tablet won't have a lot of the features of an e-reader, like an ePaper display. It will allow consumers to consume that e-book content, but I think consumers will really continue to buy e-readers considering the lower price points of those e-readers, and the fact that they're dedicated devices that do that one thing very well."

In a report this month, the Yankee Group said it forecasts 6 million e-book readers will be sold in 2010, with more than 3 million estimated to have been sold in 2009.

With an explosion of e-readers available, Apple's timing on the tablet is "so critical," said McQuivey.

"If they waited a year, it might be too late, he said. "There'd be 10 million people with e-readers who’d say, 'Eh, too late, I’m already stuck with this device. But now is the time for Apple to come in and say, 'Hold off on your e-reader purchases, guys, because we’re going to give you an e-reader that’s all that and more.”

'It' factor
Technology consultant Rob Enderle said that the consumer market is hungry for an ever-thinner, more portable device, and Apple's tablet may be it.

"Thin clients didn’t make it, PDAs didn’t make it, and while smartphones have made a significant amount of progress, they didn’t make it either," he wrote in a recent piece for IT Business Edge.

"With Apple’s unique ability to persuade buyers to try something new, this could be one of those rare products that catapults a company to even greater heights, much like the iPod and iPhone did," as well as "formally begin a process that will dramatically change the way we communicate, enjoy content ranging from text to video, and access the Web while mobile.

"This could bring change as big as that Apple initially created when it launched the first real personal computer."