Is Apple's Next Big Moneymaker Right Around the Corner?

Your iPhone might be getting a big brother soon. From niche tech blogs to The Wall Street Journal, the media is abuzz over reports that Apple (Nasdaq: AAPL  ) plans on launching a new, larger touch-screen device. Whether the gadget is more akin to a beefier iTouch, a netbook, a tablet, or something completely out of left field remains to be seen. However, when Apple starts fooling around with a new product, investors tend to take notice; the company has a pretty impressive track record of product launches that inevitably turn into the next big thing.

Well, this is all speculation
Indeed it is, but there is some traction behind the rumors. On Monday, there was a report out of Chinese-language newspaper Commercial Times that Taiwanese firm Wintek would supply touch panels. That claim was followed up on Tuesday by a Dow Jones story that substantiated the news, but the article's source tempered enthusiasm by reporting "specifications and functions are still under evaluation." However, there is one common theme in all the hullabaloo: No one's saying that the device will function like a typical netbook.

One of the most striking considerations from initial reports is how many markets the device could potentially compete in if it's actually a tablet/netbook hybrid. The hybrid would instantly become a viable competitor to Amazon's (Nasdaq: AMZN  ) red-hot Kindle in the e-book space, and it would provide a larger screen and computing power to further compete with Sony (NYSE: SNE  ) and Nintendo's (OTC BB: NTDOY.PK) handheld video game offerings. Also, let's not forget the netbook market, where U.S. companies like Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) have been struggling with the reduced margins inherent in netbook sales. However, my thought is that those companies needn't be as concerned. Apple won't produce enough units to make a serious dent in netbook market share; rather, it's creating a niche product whose effects would be spread across the devices listed above.

Foolish bottom line
The best part of all this is that if rumors prove true, Apple has decided to engage the netbook competitive threat under its own terms: inventing a new platform. Apple doesn't do well in a price race to the bottom; that's not its style. The company is best when it's innovating and creating new platforms that consumers crave. I couldn't say this better than Foolish colleague Tim Beyers, who offered the following to in late December:

Apple isn't a skinflint, and it shouldn't try to be one. It should forget netbooks. The iPhone is already as good as one, and it'll only improve as the App Store expands its offerings. It's the platform that the much-mocked Newton hoped to be but never was, and it's the precursor to my theory for Apple's Next Great Thing -- a Wi-Fi tablet Mac based on the Safari browser. If I'm right, look for it in 2009.

Starting to look like prescient words from Mr. Beyers. While many have been quick to shovel dirt on Apple's grave in the wake of Steve Jobs' medical leave and lowered Mac sales thanks to price-conscious consumers, Cupertino's got something brewing that might just address those concerns.

Get your Apple on with related Foolishness:

Fool contributor Eric Bleeker owns no position in any of the companies mentioned. Dell is a Motley Fool Inside Value pick. Apple, Amazon.com, and Nintendo are Motley Fool Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy dunked over Dikembe Mutombo in a pick-up game last week. It was awesome.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 11, 2009, at 4:45 PM, imalost wrote:

    In your article you say "Red Hot Kindle", how do you get this information ? Amazon has refused to disclose this information. The only guesses have been by Mark Mahaney of Citi which has a conflict of interest. Besides Maheny's method for calculating Kindle sales are laughable. He is far from accurate oand probably of by 50%. A better measure of how good Kindle sales are is the fact that Amazon allowed book sales on the I-phone. You don't do this unless sales are really disappointing. When Amzon sold the Harry Porter book they kept a running count, but they won't disclose Kindle sales, that in itself tells you something. When Apple brings out their book reader, Amazon will have to send the Kindle to the junk pile. They are better off sticking to what they do and not going head to head with a technology powerhouse, they will lose.

  • Report this Comment On March 11, 2009, at 5:04 PM, networkgarden wrote:

    My thesis is that unless and until the touch UI gets materially better as a serious text input device, the logical applications for this device are around entertainment and communication hybrids (where text input is tail, not dog) - not as a netbook/computer replacement (although plenty will get caught up in the semantics of terminology).

    To me, this makes it the perfect living room companion device, and also the larger screen top opens up to more immersive entertainment apps (where device can overlay/compliment what’s on TV, be a Wii-like controller, be a communications dashboard, connect back to home office Mac, be the wedge to Apple TV viewing form factor, support Second Life/VR types of apps, etc.).

    That also implies leverage of iPhone Platform, App Store and developer ecosystem, which oh by the way, makes it a nature computing distruptor for snagging the high school and younger student crowd (I see this one big time with my 3/6 year olds, and my nieces/nephews - junior/high school aged), who would readily carry one of these in their backpacks.

    If interested, I blogged on this one at:

    Apple, TV and the Smart Connected Living Room

    http://bit.ly/FBEk

    For what it’s worth, there is also a link at bottom of that post to analysis of Boxee/media center space.

    Check it out.

    Mark

  • Report this Comment On March 11, 2009, at 5:55 PM, SlowFlight wrote:

    The tablet wouldn't be "based on Safari Browser". Safari is just an app running on top of the crown jewel, the OS X operating system connected to their application distribution platform. You could expect to see a full blown version of the iPhone OS (a variant of Mac OS X with very few limitations) or simply Mac OS X running on top of the device with perhaps a specialized "springboard" application with which users would launch applications.

    Developers like myself who build iPhone application would likely be able to use the same development environments (Xcode, Dashcode) to build applications and the same deployment mechanism (App Store) to push applications to market. With the larger screen real estate, you'd see enhanced versions of iPhone applications built for this form factor, new apps that take advantage of faster hardware and a larger display (e.g. a variety of eBook readers), multimedia playback apps, etc., etc. This is exciting to developers that already have iPhone or Mac dev experience, as we get another set of devices to build apps for and a simple mechanism for getting paid for use.

  • Report this Comment On March 11, 2009, at 6:07 PM, TMFRhino wrote:

    imalost,

    The red-hot Kindle sales is a reference to 1.) The aforementioned analyst estimates and 2.) The lack of product availability. Granted, the volume of Kindles sold relative Apple's major consumer products isn't a 1:1 comparison. While there could be some argument as to the total sales volume, I think the attention the product has warranted for Amazon is alone reason to describe it as "red hot."

    That being said, I agree with you. The Kindle has a far smaller user base than what Apple appears to have brewing. The Kindle's niche is smaller than the niche Apple's device looks poised to carve out.

    Plus (and this is a potentially big if), if Apple can release a device with the range of functionality most expect at a price slightly premium to most netbooks (let's throw $700 out there), that seems far more compelling to me than a dedicated ebook reader for $360.

    And that's a sentiment I think many would agree with.

  • Report this Comment On March 11, 2009, at 6:18 PM, imalost wrote:

    TMFRhino

    1) The analyst estimates are bogus based on inconclusive data to move the stock Citi Owns. The basis of his estimates leads one to believe there is another motive for his highly euphoric claims. He provides no concrete evidence for his assertions.

    2) If the product was hat successful than Amazon would have bee totally inept in their production planning. The "out of stock" was a ploy to make the product a better seller than it was. It was a marketing gimmick, Amazons are pros in using PR to move their stock.

  • Report this Comment On May 27, 2009, at 4:02 PM, gslusher wrote:

    "iTouch"? No such thing. It's "iPod touch," with a lowercase "t." It's one thing for a random poster to use "iTouch," but it's not acceptable from a professional journalist. It bespeaks lazy thinking. Perhaps we should call you "Eblee."

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