When You'll See Apple's Next Big Thing

The iTablet, a would-be rival to Amazon's (Nasdaq: AMZN  ) Kindle and Apple's (Nasdaq: AAPL  ) latest try at inventing The Next Big Thing, could be in stores in September, London's Financial Times newspaper reports.

Quoting unnamed executives who had knowledge of the tablet, the FT says the device will be touch-sensitive and feature a 10-inch diagonal screen. "It's going to be fabulous for watching movies," one entertainment executive told the newspaper.

Movies and other video are sure to be a part of the device's marketing plan, but so is music. Executives who'd been told about the iTablet were gathered to address the greater problem of flagging album sales, the FT reports.

Apple is working with Sony (NYSE: SNE  ) , EMI, and Warner Music (NYSE: WMG  ) , among others, to create a more interactive iTunes that would give album buyers added goodies. Code-named "Cocktail," the new iTunes would include photos, lyric sheets, liner notes, and video clips in a revamped version of the classic album covers and inserts of old, the FT reports.

Labels earn better margins on albums. Why? Because when listeners cherry-pick album fare, they force labels to absorb the cost of producing less-popular tracks.

This didn't used to be a problem. When albums were only available via CD or vinyl, labels didn't worry about underperforming tracks. Shoppers still bought them, because they had little other choice. Track-by-track shopping via iTunes has changed that, and album sales fell 14% in 2008 as a result, according to researcher Nielsen SoundScan.

Might the iTablet rekindle interest in artistic covers and albums as anthologies, to be enjoyed as a series of chapters in a sitting? I'm not sure it matters. Nor am I certain there's pent-up demand for an entertainment tablet, even if the iPod Touch has proven to be a successful gaming platform.

With an iTablet, Apple is trying to succeed where Microsoft (Nasdaq: MSFT  ) and others have failed. Multimedia music player, movie screener, e-book reader -- whatever the iTablet ends up being, it has to be better than anything else before it, including the cultish Newton personal digital assistant.

In other words, it really does have to be The Next Big Thing. And that's no easy task.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy enjoys a warm cup of coffee with a cold slice of apple pie.


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