The Apple tablet: Bigger than Apple TV, $1.2 billion annually

Written on 7:55 AM by Mujtaba

Apple’s forthcoming tablet will shift 70 percent more units than Apple TV did in its first full year, adding a cool $1.2 billion of revenue, estimates the research firm Piper Jaffray. The web/email/multimedia/gaming device might include a 3G cellular modem, it’ll multitask, run existing App Store programs, and compete in the netbook category even though it won’t be a netbook.

Market research firm Piper Jaffray has issued a new research note speculating on features of the rumored Apple tablet. The document cites insider sources who claim the device will launch in early 2010, as opposed to and targets suggested by Chinese sources and entertainment industry execs, respectively. ’s what Piper Jaffray’s senior research analyst Gene Munster wrote in the note:

Last week we spoke with an Asian component supplier that has received orders from Apple for a touch-screen device to be fulfilled by late CY09. This data point underscores our thesis that a tablet will likely launch in early CY10.

Munster expects the tablet to sell 2 million units in its first full year, at $600 each, creating an additional revenue stream worth $1.2 billion, or approximately three percent of Apple’s estimated revenue in the calendar year 2010. The analyst warned that the Street has yet to bake in the tablet factor into forecast models for Apple.

Although Apple’s tablet most likely won’t have enough oomph to rival the Mac, iPhone, and iPod businesses, it’ll beat a niche product that is the Apple TV, which sold 1.2 million units in the first 12 months on the market. If anything, the tablet business should offset the shrinking iPod sales that Apple has seen in past few quarters. Munster even provided a of what he thinks the tablet will look like that’s closely aligned with of the product.

Here are from Munster’s report:

• Basically a huge iPod touch, the tablet will offer at least four times the resolution of the iPhone’s 480×320 display.
• It’ll be primarily focused on email, web surfing, digital media, and games.
• It won’t be a netbook and it won’t be marketed as a netbook, but it’ll compete in the netbook category.
• The tablet will add an additional $1.2 billion in annual revenue (about three percent of Apple’s estimated revenue in calendar 2010) by selling 2 million units, at $600 each, in the first 12 months.
• It’ll sell better than the Apple TV, which moved 1.2 million units in its first full year.
• Developers will be able to create and distribute apps through the App Store that are optimized for the tablet’s bigger screen.
• The tablet will run the vast majority of the 70,000 App Store programs created for the iPhone platform.
• It might come with a 3G modem for on the go connectivity through cellular networks.
• It’ll fill a gap between a high-end iPhone and a low-end MacBook, costing between $500-$700.
• AT&T or Verizon might subsidize the device by requiring you to subscribe to a data-only plan.

Backwards compatible with the App Store offering

Munster’s early 2010 estimate falls in line with AppleInsider’s derived from “sources familiar with the project.” On the other hand, the entertainment industry is allegedly pushing for a Christmas launch in order to benefit from holiday season by selling tablet owners entertainment content through the iTunes Store. Although I’m just speculating here, there should be no doubt about backwards compatibility because the device will be allegedly built around a variant of the iPhone OS. However, I doubt the tablet will feature the so-called premium App Store or a new section inside the existing App Store that will carry only tablet-optimized apps.

App Store programs should run across all iPhone OS-powered devices because Apple won’t risk fragmenting the platform. Backwards compatibility stems from the fact that the iPhone SDK requires developers to write resolution-independent apps that depend on APIs of the iPhone OS, not the hardware. User interface in iPhone apps is constructed in relative terms, using percentages, so the iPhone OS can scale it to whatever output resolution is available. When it comes to games, the tablet’s GPU could enlarge the hard-coded 480×320 output to a higher resolution.

It won’t be OS X device

With a beefier CPU/GPU, more RAM, and a longer battery life stemming from a larger form factor, the tablet might easily run multiple apps at once. However, since Apple disabled multitasking on the user level on the iPhone, citing security reasons, don’t hold your breath for a multitasking-enabled tablet. While we’re speculating, I’m convinced that the tablet will feature an entirely new apps manager, a cross between iPhone’s springboard and OS X’s Finder.

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