The Financial Times, quoting people who had been briefed on the project, said the device would have the same capabilities as the iPod Touch, but the larger screen would make the gadget better for watching video or reading electronic books.
Recognizing that content would be an important sales driver, Apple is in talks with the four largest record labels, EMI, Sony Music, Warner Music, and Universal Music Group, to sell through the iTunes store albums that would include video clips and interactive material, such as photos, lyric sheets, and liner notes, the Financial Times said. People would be able to click through the material while listening to songs.
Such a deal would be attractive to record companies, because it could spur sales of higher-margin album sales, which have plummeted as a result of people preferring to buy only individual songs online.
In addition, the newspaper said Apple is talking to book publishers about offering electronic books for the device, making it an alternative to Amazon's Kindle and Sony's Reader.
The tablet would not have phone capabilities, and would depend on a Wi-Fi connection to access the Web, the Financial Times said. However, a similar report on an Apple tablet by Apple Insider said the device would also support wireless carriers' 3G data networks.
Apple's success with the iPod, which redefined the market for portable music players, and the iPhone, which did the same for the smartphone category, has shown that the company is capable of bringing game-changing technology to market. But the tablet as described in media reports is not considered a slam dunk by some analysts.
The first issue is the price tag. Reports have the gadget selling for between $600 and $1,000. If the price came in at the middle of that range, it could still be too much, since anything more than $500 to $600 is unlikely to attract a mainstream audience, say analysts. "I don't think it's going to be a big seller at $800," Ezra Gottheil, analyst for Technology Business Research, told InformationWeek.
For the device to be successful, it would have to be an affordable alternative to a netbook, the popular mini-laptops that typically sell for less than $500, and low-end full-size laptops. Wi-Fi would probably prove more popular for connecting to the Web than a wireless connection from a carrier.
"Unless they let you use the same data account with other devices, people are going to have a very hard time signing on for another data plan," Gottheil said.
A keyboard would be a must on such a device in order to make it a true alternative to a similarly priced laptop. The keyboard doesn't have to be attached, but it would need to be easy to carry and attachable through a wireless, Bluetooth connection.
If the price and capabilities are right, then an oversized iPod Touch could be attractive. Apple has shown there's a demand for handheld computers with the success of the iPod Touch, which is essentially a $229 iPhone without the phone capabilities. Analysts believe Apple has sold about 19 million of the devices.
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