Apple’s (AAPL) new tablet computer has been described as a larger version of the iPhone. It probably has a touch screen that is 10.1″ across and offers access to both 3G and WiFi communications. The screen will set up for easy reading of book content or movie viewing. The retail price is likely to be between $800 and $1,000. Recent ChangeWave research indicates that the product will sell well as soon as it is available.
But, Apple’s path to a great success is blocked by products from companies with substantial revenue and massive distribution channels. The Amazon (AMZN) Kindle will continue to be the market leader in e-readers for some time. It is priced at $250, so the Apple tablet may have trouble taking much share from Amazon.
The tablet is also up against netbooks, the fastest selling part of the PC market. A number of Asian manufacturers, Dell (DELL) and Hewlett-Packard (HPQ), offer these products. They have very small screens, unlike the Apple product, but run fairly powerful Intel and AMD processors, and, in most cases Windows. Netbooks sell for about $300 which gives them a price advantage over the tablet. The Apple product’s screen size may trump the cost difference for consumers who are interested in watching multimedia content.
Dell has already put products into the field that will give the Apple tablet significant competition. Dell’s Alienware gaming laptops start at $1,199. These PCs have 15″ screens, can sit flat and run powerful Nvidia graphics chips. It is hard to see how the Apple product can match most of those features.
HP is also in the market with products that could undercut Apple tablet sales. HP’s Touchsmart laptops run touchscreen technology like that expected to be used on the Apple tablet. The machines are priced as low as $1,000, can run 3D applications and are set-up to act as internet TVs.
Apple has a remarkable success with the iPhone even though it entered a market dominated by RIM (RIMM), Nokia (NOK) and the large Korean handset companies — LG and Samsung. The brand legacy of the Mac and iPod helped Apple get its first iPhone customers and, as the product proved its value, it because part of the Apple brand legacy on its own.
Apple faces tough competition for the tablet, and its brand may have to carry it the first few steps of the way as it gets its initial customers.