Would an Apple Tablet Kill the Kindle?

Once, it was just a rumor. But now, BusinessWeek says that Apple (Nasdaq: AAPL  ) plans to introduce a Mac OS X-based tablet in 2010. If done well, it could destroy Amazon.com's (Nasdaq: AMZN  ) improperly priced Kindle DX -- and that's just for starters.

On the drawing board
Piper Jaffray analyst Gene Munster, long known for his coverage of the iEmpire, concurs with BusinessWeek's reporting. "Between indications from our component contacts in Asia, recent patents relating to multi-touch sensitivity for more complex computing devices, comments from Tim Cook on the April 22nd conference call, and Apple's acquisition of PA Semi along with other recent chip-related hires, it is increasingly clear that Apple is investing more in its mobile computing franchise," Munster wrote last week in a note to investors.

Of course it is, Gene. What else could Apple be working on? A margin-destroying netbook, a la models from Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) ? Cook wants none of that market, nor do most Apple investors, according to the comments we've seen here at Fool.com.

An iTablet is the best possible device for Apple to make right now, and the Kindle's only one of the competitors it might best. Here are the three faces of an iTablet, as I see them:

1. Kindle replacement
The Kindle family is great for many reasons -- particularly because these devices have forced the aging publishing industry to think differently about how to save itself. The large-format DX could lend a hand to newspaper and magazine publishers such as Gannett (NYSE: GCI  ) and Meredith by allowing them to monetize more of their digital content.

Unfortunately, exactly none of these benefits is hardware-dependent. Amazon knows this, too. That's why there's a free "Kindle for iPhone" application in the iTunes App Store. A highly interactive iTablet with a full-color screen, multitouch zoom, and other nifty features would make the black-and-white Kindle look like the PalmPilot of tablet devices: highly innovative for its time, but left behind by a sea of snazzy second-generation winners.

2. LeapPad replacement
In all of our gushing over the iPhone, we tend to forget that the iPod Touch was a huge winner this past holiday season. Users have come to see it as an interactive game platform that's emerging as a threat to Sony's PSP and Nintendo's DS.

More broadly, the App Store has become a gold rush of sorts for enterprising developers with dreams of i-sized riches. Blame it on the economy or an insatiable appetite for hype -- whatever suits you. Either way, developers are transforming Apple's mobile products into platforms. An iTablet could benefit from this enthusiasm by shipping with a suite of kid-friendly games and tutorials, every one of which would also be available on the cheap via the App Store.

LeapPad? Who needs one of those?

3. PDA replacement
Smartphones have mostly replaced personal digital assistants, or PDAs, as they were once known. The remaining gaps have been largely filled by mobile entertainment systems such as the PSP and DS. Even Palm (Nasdaq: PALM  ) , creator of the category, yields to this truth: Its core products are smartphones.

And yet there are businesses where on-the-go computers make sense. United Parcel Service (NYSE: UPS  ) has them for package-tracking. Retailers use them to check and clear inventory or, in especially hyperefficient cases, to ring up customer orders.

Need a real-world example? Try Apple itself. Today, Apple Store staff use handhelds not of Apple's design to complete purchases, but an iTablet could do the same job. Imagine a touchscreen pad with an interactive sales form, a built-in iSight camera, and software to read bar codes. Presto! You've got a checkout device.

But those are just three ideas. With a rich and ever-changing App Store, the possibilities for an iTablet are vast. Will the Kindle keep up? Don't bet on it.

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Tim had 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. Its disclosure policy forgot to do its homework last night. Oh, wait. It's summertime. Never mind.


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  • Report this Comment On May 27, 2009, at 2:57 PM, D2009 wrote:

    Kindle replacement: quite possibly; the screen is supposed to be larger than the Kindle 2's is.

    LeapPad replacement: sure, I guess. I didn't know the LeapPad was that hot of an item to begin with.

    PDA replacement: probably not. Anything much bigger than an iPod/iPhone just won't cut it as a PDA -- if it doesn't fit in your pocket, forget it.

    You forgot:

    Netbook replacement: if you hunt and peck on a 7" (or even 10") EeePC or other mainstream netbook, you probably wouldn't mind a tablet that pulled up an on-screen keyboard much like touch-screen PDAs do today.

    I'm sure it'll be a great device, but the trick for Apple is the price point.

    Netbook: ~$300-$400+

    Kindle 2: $360

    Kindle DX: ~$500

    Smartphone: ~$200-$400 (w/ contract)

    So clearly if Apple prices this thing above $500, it better be pretty packed with features -- and no, I don't consider a flashing Apple logo to be a "feature". :-)

  • Report this Comment On May 27, 2009, at 5:48 PM, TMFBent wrote:

    Tim, Please.

    I use a tablet computer. I use desktop machines (or the tablet in desktop mode) I use a kindle. Do you?

    I don't think so, because if you did, you'd realize They're nothing similar, nor are anything of them like touchscreen ipods.

    And I challenge you to read books on a computer screen all day long. Can't be done. That's why e-ink is used in every reading device. But e-ink can't operate graphically the same way as a computer screen does. Probably won't for 5 or more years.

    So, you're talking about mixing devices in a way that won't work, and given limitations in battery power, processing power, and ergonomics, can't work.

    Here's the reality that you haven't bothered to present: touchscreen input is really best for manipulating small amounts of repetetive data. Tablet computing (with a pen) is good for marking up more complex data, and neither of them are good for data entry and manipulation (mouse and keyboard are much faster and better on your fingers).

    Moreover, tablet computing (with a pen) takes significant computing horsepower if it's to be useful. Vista's tablet operating system, for instance, is great with handwriting recognition and in an application like OneNote, actually indexes the handwriting as text. But that takes a lot of computing power, more than will fit comfortably into a tiny package. You couldn't run it on a MacBook air very reliably. (I know because I run a faster chip, more RAM, and faster hard drive than a macbook air in my tablet...)

    Don't even get started on the battery consumption this takes. It's a lot.

    That means you can:

    1) make the device as big as it needs to be to be useful (that's a 12-inch tablet, as already exist, and weigh 4 pounds or so...)

    2) make something smaller that doesn't do as much, or for as long with the caveat that...

    2.5) Neither will have a screen that's comparable to the Kindle's easy-reading e-ink.

    Or, you can:

    3) stick with your small, optimized, separate devices that do what they do well.

    It's nice to play "guess that apple product," but better informed guesses would be best.

    Tablet computers exist, and they don't compete with the Kindle. Apple won't change that, no matter how much you like Apple.

    And catch up on the tech! There are already applications out there (a very interesting MSFT onehttp://www.microsoft.com/tag/) that can turn your smartphone into a checkout device. No new hardware is necessary. It will run on a 4 year old phone so long as it's got a camera in it. I've run it on a 4 year old samsung phone.

    Sj

  • Report this Comment On May 28, 2009, at 1:13 AM, planemechanic wrote:

    I think #1 and #3 will be THE big selling point for the Apple tablet. I would buy a kindle today if it was in color and did more than just reading. I love to read magazines and other medium that NEEDS color to work properly.

    And don't discount the millions and millions of Franklin Covey style planner users out there. I love my FC planner, everything except the fact that it is on paper. How nice it would be to forward an item from today to next week without having to re-write the item again or to use shorthand on the new date to refer to the old date. I like to plan everything. If I need to remember to do something in 2012 I want to be able to enter it in my handheld planning device that is in book format and about the size of the FC medium planner (not 8 1/2 x 11, but not iPhone small either, somewhere in between, about 8-10 inches diagonally) and have the item there in 2012 when I need it. Anyone who discounts this market it missing the boat. BIG TIME.

  • Report this Comment On May 28, 2009, at 4:46 AM, dhawkins1234 wrote:

    I agree completely with TMFBent. The things that make the Kindle viable for serious readers is the e-ink display, the weight, the ultra-long battery life, and access to the Kindle store virtually anywhere, via cell-phone networks when you're not within WiFi.

    It's simply not technologically possible within the next few years for Apple to do all of those things, in addition to normal tablet computer functionality, and even if it were, the cost would be well into the thousands. Five or ten years down the road? Maybe, but nobody expects the most recent incarnation of the Kindle to last that long anyway.

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