Apple Netbook Makes More Sense than iTablet -- For Now

"I notice increasing reluctance on the part of marketing executives to use judgment; they are coming to rely too much on research, and they use it as a drunkard uses a lamp post for support, rather than for illumination."

-- David Ogilvy

There is a known market for notebook computers, and that market had been soaring until the economy went bonkers. There is a known and growing market for netbooks, and Apple can, if it wishes, carve out a piece of that market as well. But what is the market for an iTablet?

When I think about a new product, I start to think about current markets and who would buy the new product. In some cases, there is a nascent market that hasn't been properly exploited. Some company comes along and seizes the market with a combination of timing, technology, and marketing. The original iPod is an example.

Original Apple iPod

Original Apple iPod

However, when I think about an Apple iPod super touch ... or iTablet ... I can't help thinking about the Ultra Mobile PC (UMPC) catastrophe of a few years ago. That was a case of the industry (and Bill Gates) trying to force something down the throats of people who didn't need an UMPC, but it looked cool. Among the UMPC's many problems were an overzealous design, terrible UI, complex OS requiring a fast, power hungry processor, high price and limited battery life. In fact, the poor battery life became a standing joke that characterized the technology, just like the handwriting recognition snafus doomed the Apple Newton. An excellent analysis of the UMPC failure has been presented by DeviceGuru. A less technical, more light hearted explanation for the success of the netbook was posted at gadgetell.

Even though Bill Gates thought the UMPC was perfect for his kids to watch movies in the back seat of the car, the market place didn't accept the device, and the UMPC is now relegated to the dustbin of technology failures.

By the way, battery technology has come a long way in the last few years. Combined with Apple's expertise in low power designs, thanks to the acquisition of PA Semi, I don't believe battery issues are the show stopper now for an iTablet that they were for UMPCs in 2006. The defining issue is different in 2009.

Samsung UMPC

An early UMPC

The Staging Issue

The UMPC failed for a key reason. Recall the Apollo lunar landing technology of the 1970s. While the Command Module stayed in Lunar orbit, a Lunar Module (LM) descended to the surface. It made no sense to take the Apollo Command Module, with its heat shield designed to re-enter the Earth's atmosphere, down to the moon's surface. In addition, the LM was designed so that the rocket engine that managed the descent stayed on the surface when the LM took off for Lunar orbit rendezvous. No sense lifting a used engine and fuel tanks back into Lunar orbit.

Orion and Lunar Module

Next Generation: Orion and LM will work the same way

Many business and even average consumers work in the same mode. There may be a desktop computer or server at home with terabytes of storage, a printer, and a big screen. When on travel, one takes, say, a MacBook. But at the destination, there are times when lugging the MacBook around doesn't make sense. So it stays in the office or host's house, and one takes the iPhone to lunch or the amusement park. There is a clear-cut sequence of lightening the load based on the environment and needs. Call it sequential staging, like a rocket booster.

So the question is: where does an iTablet with a six or seven inch screen fit into the above staging process? It doesn't -- unless one is just a collector of gadgets. And that, above all, may explain why Apple hasn't released such a device.

The Apple Netbook

Apple has proven, however, that there is a clear cut market for classy and small notebooks, like the MacBook and MacBook Air. Also, according to a recent Gartner report, standard PC sales have been slumping, but the sales of netbooks is on the rise. Not a lot of money may be made in the PC industry, but a growing market in a recession is nothing to sneeze at.


Concept: MacNetBook (Credit: The CustomMac)

Recently, we heard rumors about Apple ordering 10-inch screens for a new product. When I think about it, a MacNetBook with a 10-inch screen that looks exactly like the big brother MacBook is a perfect way to lure cost conscious customers who want a Mac, but can't afford $1,100, to join the Apple fold. A 2 lb (787 g) MacNetBook sans optical drive, with a modest 128 GB SSD, and an 80 percent standard size keyboard could sell for US$699. Just low enough to attract people who are reluctant to spend $500 for "a piece of crap" as Steve Jobs has explained.

In the case of the MacNetBook, there is no puzzling over the intended market. It already exists in spades. A MacNetBook with a 10-inch screen wouldn't cannibalize the 13-inch MacBook. It would have a friendly, physical keyboard and no one would be at a loss as to what it could be used for in business, education, or casual video watching and iPhone-like gaming. Students with educational discounts would snap them up as fast as Apple could make them.

The MacNetBook would be a winner out of the box and nicely supplement Apple's line of products in size, computational power, and pricing.

Recently, I pondered the possibility of an Apple iPod super touch, basically an overgrown iPod touch. I still believe that Apple is working on such a product for certain markets: medicine, inventory, gaming, remote system management -- to name a few.

But that market has to be driven by fundamental needs combined with new, compelling technology. That's why I now think the MacNetBook will come first, in 2009, and as the needs of mobile users gets sorted out, Apple will unexpectedly seize a new, emerging market that doesn't mimic the Lunar Lander scenario. It will be wholly unexpected and ground breaking. But that market won't emerge until we're out of the recession in 2010.

Finally, the consensus of the blogsphere and twitterverse is that Apple will release an iTablet soon. I take that as the necessary and sufficient condition that Apple will do something much smarter. Build a MacNetBook that isn't crap, flesh out the product line, and make money.