Apple Tablet Has Slim Chance of Matching iPhone Success

Article excerpt

Apple Inc.'s tablet may have to repeat the iPhone's breakthrough success or risk going the way of personal digital assistants and so- called third devices -- products that lack the appeal of phones or personal computers.

The Cupertino, Calif.-based company sent out invitations yesterday to an event on Jan. 27, asking reporters to "Come see our latest creation." Apple is planning to introduce a tablet computer that will probably go on sale in March, a person familiar with the matter said earlier this month.

Consumers haven't embraced the idea of carrying around a third device in addition to their laptops and mobile phones, said Ken Dulaney, an analyst at Stamford, Conn.-based Gartner Inc. Tablet computers, known as slates, account for less than 1 percent of the PC market, even though they have been available since the 1990s.

"They buy a large device when they want to get serious, and they buy something that will fit in their pocket," he said. "Everything that's in between has turned out to be a temporary category."

In 2009, PC makers sold 122,000 slate computers -- devices without keyboards -- according to Framingham, Mass.- based research firm IDC. That number will increase by 49,000 this year, IDC said. Computer companies such as Hewlett-Packard Co. sell convertible laptops that have hinged, rotating screens that fold over a keyboard. About 965,000 convertible computers were sold last year, IDC said.

Earnings boost

Apple rose $9.11, or 4.4 percent, to a record $215.04 at 4 p.m. New York time on the Nasdaq Stock Market. The shares more than doubled last year.

Steve Dowling, an Apple spokesman, declined to comment on the Jan. 27 event.

If Apple sells 3 million tablets for $750 each in the first year, the devices may boost earnings by 21 cents a share, Toni Sacconaghi, an analyst with Sanford C. Bernstein & Co. in New York, said in a note last week. That estimate includes lost sales of Apple's notebooks and iPod Touch as a result of the tablet debut.

At $750, the product would be priced between the $399 top- of- the-line iPod Touch and the $999 entry-level MacBook notebook, Sacconaghi said.

Apple isn't alone in creating devices that combine the functions of phones and computers: Hewlett-Packard and Dell Inc. showed tablet designs at the Consumer Electronics Show in Las Vegas this month. Still, products that serve as a halfway point between phones and computers may not catch on, said Motorola Inc. Chief Executive Officer Sanjay Jha.

iPhone effect

"My strong point of view is that if it doesn't fit in your pocket, you don't take it to dinner with you, and therefore the usability of that device and the volume is meaningfully lower," Jha said in an interview. …