After months of hype, Apple (AAPL) is poised to announce its much-vaunted tablet-style computer Wednesday during a jam-packed event at the Yerba Buena Center for the Arts Theater in San Francisco at 10 a.m., PST. Using Apple's iTunes software to distribute media, company chieftain Steve Jobs hopes to introduce a disruptive new product aimed at moving Apple's dominance of online music into video, books, movies and games.Nearly three years after launching the iPhone, Apple is again looking to shake up the mobile-computing field. The company hopes the tablet product will become as ubiquitous and industry-changing as its iconic iPod and iPhone -- which disrupted entire markets. Apple is planning to leverage its foothold in online distribution -- through iTunes -- into a multimedia portal that consumers will use for content.
The hype has been unprecedented. "The Apple tablet seems to be making waves and changing business practices before it even gets announced," Oppenheimer & Co. analyst Yair Reiner told NPR.
Will It Save Newspapers, Books?
The introduction of Apple's tablet comes smack in the middle of a raging debate over the best way to save the news business. With print ad sales plummeting and Web ad sales failing to pick up the slack, some hope the device will offer a new platform to distribute news and other content. Conde Nast, Dow Jones and The New York Times are all working to produce content in a tablet format.
"The hope is that Apple will do with e-books what it did with iTunes, which is make this very sexy and seamless and easy to use," Craig Teicher, the editor of the blog eBooknewswer told NPR.
Others aren't so optimistic. "It's not a silver bullet, it's a bronze bullet, and you're going to need a big M-16 full of them," analyst Mike Vorhaus, of Magid Advisors told Reuters. Newspapers and news organization are facing crushing budget pressures, forcing them to lay off staff and look to freelancers for content. Meanwhile, Web-based revenues have barely begun to pick up the slack. Traditional publishers are looking for a way out.
Despite the tablet's hype, "In the short term there's not a big impact, and I think it's going to take probably three years to have this scale into a real driver of profit," Bob Sauerberg, head of marketing for Conde Nast told the newswire.
Bridge the Gap
Apple is hoping to bridge the gap between bulky desktop and laptop computers and smartphones, like its popular iPhone model. It remains to be seen whether such a need exists. The personal computing market has seen a flood a low-price netbooks, not to mention increasingly sophisticated smartphones. Amid such a proliferation of new devices, who needs a new gadget?
With the locus of computing moving away from bulky desktop computers to mobile devices, Apple CEO Steve Jobs is betting the time is right for a tablet PC to break through -- like the Walkman-beating iPod did, and the smartphone pioneer iPhone after that. But the company bears the weight of its failed Newton handheld computer, as well as the still-unproven marketability of a tablet-PC category, which has failed to gain traction.
But that won't stop Steve Jobs from trying -- even on a product with no apparent need. Forrester analysts Charles Golvin and James McQuivey acknowledged to VentureBeat that the impending tablet device is "flawed in meaningful ways: It's a computer without a keyboard, it's a digital reader with poor battery life and a high price tag, and it's a portable media player that can't fit in a pocket."
An Opportunity to Charge More
The hype has been historic. Not even the company's iconic iPod or iPhone generated this much buzz. "The new products we are planning to release this year are very strong, starting this week with a major new product that we're really excited about," Apple CEO Steve Jobs said in a statement this week.
Apple boosters point to the device's multimedia capability. "Nobody's buying a tablet to read e-books. The lowest-end Sony Reader, which costs $199, does a fantastic job of reading books," Gartner analyst Allen Weiner said in comments cited by the LA Times. "Where's the opportunity? It's creating book experiences. It's taking a cookbook and adding video and author updates. That's an opportunity, because you can charge extra for that."
Apple executives refused to comment on the Wednesday event during a call with investors earlier in the week. "I wouldn't want to take away your joy on Wednesday when you see our latest creation," Apple Chief Operating Officer Tim Cook said, after one analyst pressed him. The company sold 3.4 million Mac computers last quarter, a 33% increase. The big jump in iPhone sales more than made up for slack sales of its iPod digital music players. Per the company's strategy, iPhones -- and their iPod Touch siblings -- are supposed to pick up for the decrease in traditional iPod sales.
Even with today's announcement -- which is all about buzz -- Apple is hitting all cylinders on the fundamentals. "We see a lot to like in Apple's results and would continue to be strong buyers ahead of this week's main event -- the tablet unveiling on Wednesday," Oppenheimer analyst Reiner wrote in a note to clients.
JPMorgan Chase analyst Mark Moskowitz agreed. "Apple remains our top pick in IT hardware, and we believe the story has staying power for 2010." Will the same be true of Apple's tablet device?
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