Apple's iSlate will be game-changing

Given the company's reputation for innovation, the new device could allow us to see tablets in an entirely new way.

By TheStreet Staff Jan 20, 2010 2:03PM

TheStreetBy Eric Jackson, TheStreet

 

Next Wednesday's new-product announcement is Apple's (AAPL) worst-kept secret.

 

We all know that Apple will announce its new tablet computer, the iSlate. Apple knows how to leak just enough information to create a frenzy among tech reporters and gizmo enthusiasts.

 

Many of us have become immune to yet another product announcement from Apple. But the iSlate will be different.

 

While many blogs are focusing on the possible specs for the new device, mainstream analysts and investors are taking a more measured approach. The potential for a surprise gain in holiday sales has garnered more excitement than the iSlate announcement. This is an oversight.

 

Bing: More on the Apple iSlate

 

Let's step back and look at Apple and how much it has grown in the past three years. Revenue is up 52% to $36.5 billion. Operating income is up 77% to $7.7 billion.

 

During that time, the iPod hit market saturation, while iMac sales continue to grow even amid the economic slowdown. The iPhone has also taken market share in the handset market at a blistering pace from zero units three years ago.

 

When the iPod came out, in October 2001 -- just weeks after 9/11 -- there was little media coverage. At the time, the device had a 5-gigabyte hard drive and cost $400. Today, you can buy a used 1-gigabyte iPod Shuffle on eBay (EBAY) for less than $40.

 

Apple's stock was trading at $9.33 when the iPod came out. There was no boost to the stock as a result of this game-changing device, because nobody knew yet that it was a game-changing device.

 

Apple's shares rose to $12 by the beginning of 2002, but this was tied to the general rise in the Nasdaq, not the iPod. In fact, Apple's stock began to sink as 2002 progressed -- again, as the market declined -- and eventually bottomed out to a 10-year low of $6.56 in April 2003.

 

By November 2005, the first marketing research report was published claiming that the iPod was losing its "cool factor" because it had grown so much in popularity. Pity the uncool Apple shareholders. The stock had increased only 10 times in 2.5 years to $69.34 by that time.

 

The success of the iPod had transformed the entire image of the company to visionary, especially its leader, Steve Jobs. Apple has done a masterful job of keeping this mantle of futuristic innovator since then.

 

When the iPhone was launched, in January 2007, the media were hungry to know what was next. However, the media and consumers didn't know how much they would want the iPhone until they saw it. On the day of the product launch, Apple's stock jumped 7%, while the shares of Research In Motion (RIMM) and Palm (PALM) dropped 6%. People knew this product was going to be a hit, and it has been.

 

Today, Apple's stock is higher than it was in fall 2007 -- seemingly expensive and "priced for perfection." Everyone knows that the iPod line is exhausted and close to being put out to pasture. The global economic environment isn't conducive to relatively expensive products when cheaper options exist.

 

Amid this backdrop, we have the iSlate's announcement next week. The media are curious, but a tablet lacks the sizzle of an iPhone. We've seen Microsoft (MSFT) bumble around with tablet PCs for years. Just a couple of weeks ago, at the big Consumer Electronics Show, Microsoft announced yet another new tablet, this time in conjunction with Hewlett-Packard (HPQ).

 

I suspect the iSlate will be something completely new, something that will cause us to see tablets in an entirely new way, a way that will seem obvious after we see it.


I expect it will be a device we suddenly realize that we must have, in addition to our iPhones and iMacs. It will allow us to watch videos more comfortably on the go. It will allow us to read books, blogs and news in a much richer way (at least for the next 18 months) than we would on Amazon's (AMZN) Kindle. It will allow us to get work done. And it will probably let us do at least one more thing we never imagined was possible with a tablet.

 

While the stock will not jump 6% next Wednesday, I suspect there will be an immediate boost to Apple shares from what investors see as the potential for the iSlate.

 

When you are a $185 billion company, investors want to see an exciting new product hit a huge market. World: Meet iSlate, the Kindle on steroids.

 

Related Articles

 

Exclusive: Apple, Verizon team on tablet

 

Apple's tablet: Newton redux?

 

The year of the e-book reader

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