Is Apple Missing Out on a Major Opportunity?

Take note, because I won't say this often: Motorola was on to something before it was swallowed whole by Google (Nasdaq: GOOG  ) .

Say it ain't so
The Motorola Atrix 4G smartphone featured a laptop dock accessory that would convert the device into a makeshift laptop. The idea was that your smartphone is now the hub of your mobile computing and has all of the data that you need, including your contacts and apps as well as its data connection. It was a rather clever idea that failed in no small part because of its poor execution.

Source. Motorola. Atrix 4G with laptop dock.

Source. Motorola. Atrix 4G with laptop dock.

The biggest drawback to the laptop dock was its hefty $500 retail price for a single-use accessory that amounted to little more than an 11.6-inch display, keyboard, and battery. The form factor and protruding dock on the back made it so you still had to carry around two separate devices. The phone's subsidized price by itself was just $200, and the laptop dock costs about what a full-blown cheap computer would.

On top of that, the laptop dock wasn't compatible with later Motorola smartphones that had similar functionalities, like the Droid Bionic that had a different laptop dock of its own.

Innovative idea; poor implementation.

Sounds like a good idea
Thus, the hybrid smartphone/tablet/laptop idea was born, and while it needed some work around the edges, it sounded pretty promising. Asus decided to pick up the torch with a vengeance with various members of its Transformer Android tablet family.

The Transformer Prime rode with the tablet/laptop idea and really refined the notion of a mobile device that converts into a laptop. Asus subsequently released a lower-end Transformer TF101 that offered the same functionality.

Well, Asus continues to push the envelope in the hybrid category, most recently with the PadFone. The gadget has yet to make it stateside, but it combines all those devices into one streamlined offering.

Source: Asus. PadFone.

Source: Asus. PadFone.

The PadFone builds off the same idea that your smartphone is your primary device, with various accessories adding on to the functionality. The PadFone itself fits inside the tablet to give it life and then can subsequently be attached to the keyboard dock likewise.

Source: Asus. PadFone.

Source: Asus. PadFone.

The tablet and keyboard dock each carry extra battery juice, so combined the device has impressive battery life. Android 4.0 Ice Cream Sandwich is much more refined OS at this point and can offer a much better tablet experience than its predecessor that other hybrid devices were built on. It even comes with a stylus that doubles as a Bluetooth phone headset.

What's the verdict?
The PadFone is currently available in Taiwan, but The Verge recently got its hands on a review unit. The PadFone itself is neither a show-stealer nor a laggard. Prospective buyers would likely be in it for all the transforming capabilities anyway.

Overall, the main takeaways were that this class of device has enormous potential. The PadFone has its weaknesses and there are some technical glitches marring the experience, and there are definitely areas that need work. There are performance issues and app interface hiccups when switching between smartphone and tablet mode.

The Verge's David Pierce sums it up: "After spending time with the PadFone, I believe more than ever that [the concept is] the future."

Apple: Count me out
If hybrid devices prove to be the future, then Apple (Nasdaq: AAPL  ) is plain out of luck. When asked about upcoming Microsoft (Nasdaq: MSFT  ) Windows 8 and the convergence of tablets and laptops on last quarter's conference call, CEO Tim Cook shot down the idea of seeing Apple come out with a hybrid device:

I think, Tony, anything can be forced to converge. But the problem is that products are about tradeoffs, and you begin to make tradeoffs to the point where what you have left at the end of the day doesn't please anyone. You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing to the user.

Source: Q2 2012 earnings conference call.

If there's one thing the PadFone seems to have plenty of, it's tradeoffs. But those shortfalls could be addressed over time, and there's definitely at least some demand worth acknowledging for such devices.

There are third-party keyboard docks that make the iPad look just like a MacBook. Heck, Apple used to sell its own iPad Keyboard Dock that it has since discontinued.

Source: Apple. iPad Keyboard Dock.

Source: Apple. iPad Keyboard Dock.

Listening to what customers want hasn't always been a forte for Apple; it's always just told them what they want. In this case, though, it seems like there's opportunity but Apple isn't interested in jumping in.

If Apple really wanted to make the case for the iPad as a primary computing device, then exploring hybrid possibilities is a requisite.

Even if Apple never decides to go with hybrid devices, this new premium research report still outlines why you should buy Apple. In it, you'll find all current and prospective shareholders need to know about Cupertino's biggest opportunities and risks. You'll also get free quarterly updates and urgent updates on major news. If that's still not enough for you, here's a free video report on the newest industrial revolution in 3-D printing.

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Microsoft, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Microsoft, Apple, and Google and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On June 08, 2012, at 8:44 AM, random3 wrote:

    This is a bad clunky product idea that is against Apple product philosophy and rightly so. You can already buy laptops style keyboard case for the iPad that turn your iPad into a laptop using the iPad screen - which makes a lot more sense given the excellent screen resolution of the new iPad (2048 x1536 pixels). If Apple announced one of these and I owned Apple stock at the time I would drop all my Apple stock immediately as it woud be a sign the company had lost its way again - like it did in the 90's.

  • Report this Comment On June 08, 2012, at 9:08 PM, crewdog58 wrote:

    Apple came up with a better solution long ago with MobileMe and then iCloud that's sync all your phone data with your other devices. Why buy a clunky product like this when a free and more elegant solution is already available from Apple?

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