Apple tablet won't be just an e-reader, argues analyst

But another analyst says $500 price could pit Apple against Amazon's Kindle DX

Analysts split today in their take on recent reports that Apple's long-rumored tablet will stress the device's e-book capabilities, saying that the company's plan for the "iPod Touch on steroids" would depend on the price tag.

Earlier this week, the popular gadget blog Gizmodo cited unnamed sources who claimed that Apple was in talks with several media companies, including the New York Times, to negotiate content deals for its unannounced-but-expected tablet.

"[Apple isn't] just going for e-books and mags," Gizmodo's Brian Lam wrote Wednesday. "They're aiming to redefine print."

Not so fast, said one analyst.

"It's more than just an e-reader," said Ezra Gottheil, an analyst with Technology Business Research who follows Apple's moves. "It's an application platform, it's a game and social gaming platform. It certainly will be an e-reader, that will be part of its ecosystem, but that won't be all it is."

Gottheil, who six months ago touted the idea that Apple would deliver a tablet best described as an "iPod Touch on steroids," stuck to that reasoning today. "It will use the iPhone OS, or a modified version of it," Gottheil said, echoing something said it heard from a reliable source this week.

The App Store, which Apple said this week had delivered its two billionth application, is crucial to the tablet's success, said Gottheil, which means that the device will be more than a one-trick pony. "Apple will market it as 'one more thing' nested inside 'one more thing'," Gottheil said, a move possible because of the App Store's broad library. "They'll [cast] it as able to do several increasing cool things."

Gottheil's reasoning relies on the $800 price he expects Apple to slap on the tablet, a price tag much too high for a media reader-only device. "I don't think Apple has any particular interest in just creating another Kindle," he said, referring to Amazon's $489 Kindle DX. "Apple enjoys skimming the top of the market by making something hot and getting a nice margin out of it."

Brian Marshall, a Wall Street analyst with Broadpoint AmTech, had a much different take, largely because of his price expectations.

"I think $500 is the price," said Marshall today, adding that he agreed with Gizmodo that the tablet will focus on its e-reader capabilities. "I actually think that's how they'll promote it," he added. "They'll pitch [e-books] as a big segment, but they'll also say, 'We're gonna do this in color and much better than the Kindle'."

Amazon's Kindle DX features a 9.7-inch grayscale display; according to reports out of Taiwan, component suppliers building parts for the expected Apple tablet are assembling 9.6-inch color, touch-enabled screens. Most analysts have pegged the first half of 2010 for a tablet rollout, although some have proposed that Apple will craft a two-stage introduction, as it did with the iPhone in 2007, by announcing the hardware several months in advance of availability to give developers time to create applications or tweak existing iPhone programs for the larger device.

Copyright © 2009 IDG Communications, Inc.

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