Apple's 'Netbook' May Be a Tablet Computer

Rumors that Apple will release a netbook-like product were rampant before netbooks even existed. The latest buzz on the Web and elsewhere is coalescing around the idea that Apple’s entry into the smaller-than-a-laptop-but-bigger-than-an-iPhone category could be a tablet computer.

The latest rumors were spearheaded by Piper Jaffray analyst Gene Munster, who has said that the computer maker will launch a device with a touchscreen of between seven and 10 inches. Some reports have described it as a netbook, a term that Apple CEO Steve Jobs and other company executives have repeatedly downplayed.

$500 to $700?

Munster posted a note to clients Thursday that the new device will fill a gap noted by many observers — between the iPod touch and the MacBook— and that it will cost between $500 and $700. Netbooks currently are selling as inexpensively as $300. It will also, he said, be able to run applications from Apple’s App Store and have an operating system more attuned to multi-touch interaction.

The analyst added that the operating system was the main factor delaying the release of this product line, if it exists. The delay in the OS is due to the complexity involved, Munster added, and he predicted this product line would not be released until some time next year.

The netbook category is soaring, and Apple is positioned to move into it before there is no positioning room left. According to a report from industry research firm IDC earlier this month, netbooks increased sales sevenfold in the first quarter of this year, compared to the same quarter last year.

Netbook annual sales, IDC said, could total 22 million this year and, even more relevantly, the research firm said Apple’s market share is falling.

Many players are quickly moving into this space. Earlier this week, Intel announced a beta of its Moblin 2.0, a Linux-based operating systemfor netbooks and other mobile devices. Netbooks are frequently built around Intel’s Atom chips.

‘A Different Take’

Michael Gartenberg, a vice president at Interpret, said if Apple is going to release a new product line in a comparable form factor and price as netbooks, it would “have to be a different take on this kind of device.”

He pointed out that a “seven-inch device is too big to go into a pocket, but too small to replace a laptop.” And Gartenberg said it would be “unwieldy” to type directly on a touchscreen, so a keyboard would most likely be involved.

“But what functions can this device do,” he asked, “that the iPhone or iPod can’t?” He said it can’t just be “a big screen iPod.”

Gartenberg said Apple’s differentiation in this market would have to be unique enough for the company to have an effect, as it did with the iPod and iPhone.  Because of the very low price, the resulting margins are what Gartenberg called “terrible,” which led him to be skeptical of the rumors about Apple’s plans.