The rumor mill surrounding Apple’s unconfirmed tablet PC got a whole lot of new grist on Wednesday with a report from an Oppenheimer & Co. analyst who claims that production has indeed started on the device.
The most recent round of Apple (NASDAQ: AAPL) blogosphere speculation had suggested that the device, often called the “iPad” or “iTablet,” was awaiting the final thumbs up or thumbs down from CEO Steve Jobs. If analyst Yair Reiner’s report is to be believed, it’s now gotten the thumbs up.
“The manufacturing cogs for the tablet are creaking into action,” he said in a note to clients. Foxconn, Apple’s manufacturing partner in China, is gearing up to make about one million tablets per month and Apple wants about five to six weeks’ worth of inventory, according to the report. This would mean that barring any unforeseen manufacturing problems, the product could launch in the March-April timeframe.
The price, however, might prove a challenge if it’s as high as Reiner believes.
“We believe [the tablet’s impact] will be substantial. Conservatively assuming 1M-1.5M units per quarter at an [average selling price] of $1,000 and a corporate average net income margin of 22 percent, the tablet could contribute $0.25-$0.38 of incremental EPS per quarter,” Reiner wrote.
A $1,000 price tag is certainly higher than the $500-$700 price tag of prior estimates. So what will consumers get for the price of a laptop?
Speculating on the specs
If current rumors are to be believed, Apple will use a 10.1-inch multitouch display using the same LTPS LCD technology used in the iPhone. The iTablet is also thought to support running windowed applications simultaneously, as opposed to the single-task, full-screen operation of the iPhone and iPod Touch.
A second research note today, from Vijay Rakesh at ThinkEquity, adds additional detail. Rakesh said that after checking Apple’s supply chain, he agrees the company will ship a tablet around March, and will offer it with 64GB of flash memory for storage. Rakesh also expects around one to three million units at launch.
Additionally, Reiner writes that Apple clearly has the ebook market in mind for the new device, having approached publishers with a deal to sell their books via iTunes with a generous royalty split and no exclusivity requirement.
So far, Apple remains mum on the rumored iPad, and did not return calls for comment.
Crunching up Arrington’s work
Of course, if the Apple iPad comes to market, it’s likely to compete with at least one closely watched venture — the product formerly known as the CrunchPad.
That tablet was the product of a joint venture with TechCrunch founder Michael Arrington and a Singapore-based startup called Fusion Garage. The two companies’ joint plans fell apart days before launch, leaving Arrington on the outside looking in as Fusion Garage decided to sell the product alone, without him.
Fusion Garage Founder and CEO Chandrasekar “Chandra” Rathakrishnan held a video conference on Monday to announce he was going it alone and the product would be rebranded JooJoo, an African term for “magical”.
It will have a touchscreen-based Web browser running a custom OS with no local storage that requires a Wi-Fi connection. Also, instead of costing $200 like Arrington had said he wanted, it will sell for $499, Fusion Garage has said.
But whether the JooJoo will be an easier sell than a more expensive Apple tablet remains in doubt, with a number of industry watchers skeptical that Fusion Garage, an unknown startup with no presence in the U.S. and now an vocal enemy in Arrington, could pull it off.
“Arrington’s profile I always thought was critical. Without him it’s just another tablet. I think it’s disastrous for them in the long run,” Creative Strategies President Tim Bajarin told InternetNews.com when the news broke late last month that Fusion Garage and Arrington had parted ways.