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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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