Can Apple Overdose on a Single Tablet?

One of the biggest winners during this past week's Consumer Electronics Show was undoubtedly Apple (Nasdaq: AAPL  ) .

No, the Mac daddy wasn't in Las Vegas for the expo. However, by keeping its unannounced tablet computer in the news, even though it's unveiling is presumably a couple of weeks away, Apple succeeded in a way that few could imagine without paying up for floor space or sending over a keynote speaker.

Think about it. Companies introduced 3-D television sets and next generation auto dashboard gadgetry. Hewlett-Packard (NYSE: HPQ  ) and Dell (Nasdaq: DELL  ) even showed off tablet prototypes during the show, but Apple is still perceived to be the top dog, gadget unseen.

The great thing about Apple is that it typically lives up to the hype. The iPhone certainly didn't disappoint. Rivals all get jittery when Apple refreshes its MacBook line. Even the maturing iPod line can roll up its sleeves for welcome tweaks like video cameras in iPod nano devices, or the 2007 introduction of the gamer-ific iPod touch.  

So let me cut to the chase, here: What if the mysterious Apple tablet is a dog? What if it's an overpriced stinker? What if it's a device that is either ahead of its time or overestimates its potential market?

Oh, no! What if Apple flops?

Apple doesn't always hit it out of the park
No company pitches a perfect game. Even the mighty Apple has come up short with its Newton, Taligent, and most recently Apple TV.

The portable Newton may have come too early. The object-oriented Taligent operating system was cut loose to flop in a different company's hands. Apple TV is this generation's redheaded stepchild, but it's been a low-key fizzle for Apple.

The Apple tablet is different, though. The hype has been building for months. In one fell swoop, a single device can threaten the livelihood of everything from digital picture frames to portable video game systems to Amazon.com's (Nasdaq: AMZN  ) Kindle. It could be a revolutionary bomb, sending shrapnel flying everywhere.

Then again, we actually have to see it first. Then we have to buy it en masse.

The problem with the tablet
As the blanks begin filling in for the tablet, you'll see gobs of potential owners wiped away clean.

If it's too expensive or requires a costly wireless data plan to be truly functional, even the acceptable premium that folks are willing to pay for Apple products won't be enough to save the tablet.

Let's talk about price.

One of last week's introductions was Sony's (NYSE: SNE  ) Dash. It's more than just the glorified $199 alarm clock that it's being made out to be. The 7-inch touchscreen device can launch hundreds of Internet apps in a Wi-Fi network, doing everything from streaming YouTube videos to serving up weather and Facebook status updates.

It's not a tablet, but a lot of that depends on what consumers will expect out of Apple's tablet.

Rumored pricing for Apple's tablet has been all over the map, but a good guess is that it won't be much less than its $999 entry-level MacBook. This will open the door for wireless carriers to subsidize the price by hundreds of dollars in return for a two-year service contract, and here's where things start to get dicey.

Are consumers ready for another subscription service? There are already plenty of iPhone owners upset that AT&T (NYSE: T  ) won't let them tether the "unlimited" data plan that they are already paying for to other devices. This reluctance has helped open the market for mobile broadband solutions including Novatel Wireless' (Nasdaq: NVTL  ) MiFi portable hotspot, but consumers are going to be fed up if they have to pay for online access in their homes, smartphones, and tablets.

Clearly, its killer app will be access to Apple's App Store, but won't that make it less appealing to Apple's most rabid fan base, current iPhone owners?

I'm sure the tablet will do plenty of cool things with the aid of freely available Wi-Fi connectivity, but if the carriers get involved, expect monthly data plans to make the tablet truly portable.

If that's the case, the gadget's size will be a problem. Tablets aren't smartphones, which can be tucked inside pockets or small purses. Tech-savvy people on the go already have experience toting around laptops, netbooks, and e-books, but it remains to be seen what makes an Apple tablet travel-worthy.

Apple is in a pickle. An expensive tablet may price itself out of the mainstream market. A subsidized tablet would be more expensive in service fees, at a time when the public's already fatigued over a plethora of access tollbooths.

Am I looking forward to Apple's tablet? You bet. I'll probably buy one. However, I'm starting to think that the crowd will thin out once hype gives way to reality.

Apple and Amazon.com are Motley Fool Stock Advisor picks. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz has been an Apple fan for ages, but isn't sure if he will be hopping on the iTablet after buying a Kindle. He does not own shares in any of the companies in this story, except for Novatel Wireless. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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