Monday, December 21, 2009

Tablets could bring new life to tech sector

Consumer electronics magazines in recent weeks have trumpeted 2010 as the Year of the Tablet.

But while some tablets are out there already, analysts say no one maker, as of yet, has managed to fuse together all the necessary components that would make people stand up and pay attention and — more important — buy the product.

A number of Silicon Valley players are seen in the tablet race, most prominently Apple Inc. andMicrosoft Corp. But a number of others, from giants like Hewlett-Packard Co. to star-crossed startups like the one that grew out of theTechCrunch blog, are jockeying for a piece of the action.

And if Microsoft, Apple or others can fulfill the tech press’ tablet prophesies, it could open the door to app developers and entertainment companies with new ways to deliver business apps, entertainment apps and content.

“The hope for these devices is that they will become your personal window on to the Web, with services, games, movies, and entertainment,” said Rob Enderle, principal analyst at San Jose-based The Enderle Group. “But right now nobody has been even marginally successful in this space.”

The notoriously reticent Apple has never confirmed that it’s developing a tablet, but Oppenheimer analyst Yair Reiner said the device, a 10.1-inch multi-touch screen he believes will retail for $1,000, could be released by April. With its ability to market sexy devices, and its command of music and entertainment content through the iTunes store, even a $1,000 price tag for what’s essentially an iPod on steroids could make Apple the leader in the tablet market and have app developers scrambling to write new programs.

Apple already has more than 100,000 apps available in its app store, representing more than 2 billion downloads to date.

Details of Microsoft’s stealth project, the Courier, have been leaked to tech Web sites over the past few months as well. The tablet purportedly has two 7-inch color screens, set in a booklet format, and can be manipulated by touch or a stylus. The device is wirelessly enabled and has an integrated camera. More of a pumped-up day planner than a strict entertainment device — if the videos of the Courier leaked to are any indication — Microsoft could have a hard time keeping the product on the shelves, Enderle said.

The more the merrier

Other devices are being bandied about as well. Time Inc. is collaborating with New York-based The Wonderfactory giving Sports Illustrated readers the magazine in a multimedia format, with written content, expanded photo galleries and video and audio clips. Currently in development, Wonderfactory created the software and engineered it into Hewlett-Packard’s HP Tx2 netbook, using only the touch screen for the device.

Wonderfactory creative director Jared Cocken said only that the device would be coming “soon” and declined to discuss any details of who would be making the hardware for the device.

Martha Stewart announced on her show the week of Dec. 14 that all of her content soon would be available on a tablet. And Conde Nast announced in November that it would have a digital version of Wired magazine available for the Apple device, while acknowledging that Apple wouldn’t even tell the publishing house if it had a device.

Advantages to choices

So what’s brewing is potentially a huge competition if — and it’s a big if — any of the high-profile devices come to market next year.

“Being first to market doesn’t mean anything if you can’t figure out how to market it and make it interesting,” Enderle said. “And until it’s out there, we don’t have an idea as to how large the market for it might be. Until the first one is out there, it could be the one device everyone has to have, but now it’s the one device nobody felt they needed. And that’s a big range. It all depends on how the market receives this upcoming class of device.”

The battle is likely to be tough for Apple, Enderle said, oddly enough in part because of the controversy now swirling around the JooJoo, a device that began its life as the Crunchpad in a joint project between TechCrunch blog founder Michael Arrington and Fusion Garage, led by CEO Chandrasekar Rathakrishnan.

The partnership imploded earlier this month, with Rathakrishnan wrenching control of the project from Arrington and switching the name to JooJoo, which is now being marketed via a Web site for $499, with PayPal being the only way to pay. Rathakrishnan did not respond to multiple e-mail requests for an interview. According to the Web site, the device will ship in eight to 10 weeks.

It’s believed the Apple tablet will look almost exactly like the JooJoo, and because the JooJoo has had such a “messy birth,” Enderle said, it might poison the market before Apple can even release a product. As Enderle put it, “you don’t screw bloggers” (Arrington and TechCrunch’s legion of followers) and expect there not to be serious ramifications.

The market also depends in part on whether users view a tablet as another device they want to carry around. Arrington said he never envisioned the Crunchpad as a truly mobile device, but rather something you have on a coffee table so you can surf the Web while watching television, or something to keep in a guest bedroom as an entertainment device.

Arrington, like Enderle, said he was unsure of the market size for a tablet that combined the best user experience, hardware and content. Early netbook sales had a market of 35 million, while a new device such as the Flip camera quickly sold about 750,000 a year, and the Amazon Kindle reader sold about 500,000.

As far as the Crunchpad goes, “the project is dead, from my point of view,” Arrington said. “I think Apple is going to be most compelling in this market.”

Price could be an issue, though, Arrington said, because he believes gadgets are becoming more and more expendable, a philosophy not shared by Apple, based on how it prices its products. Even so, Arrington said, “I think there’s a market for a $200 tablet.”

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