APPLE UNVEILS TABLET

SAN FRANCISCO – Apple Inc. will sell the newly unveiled tablet-style iPad starting at $499, a price tag far below the $1,000 that some analysts were expecting.

The iPad, which is larger in size but similar in design to Apple's popular iPhone, was billed by CEO Steve Jobs on Wednesday as "so much more intimate than a laptop and so much more capable than a smart phone."

The highly anticipated gadget has a 9.7-inch touch screen, is a half-inch thick, weighs 1.5 pounds and comes with 16, 32 or 64 gigabytes of flash memory storage. The basic iPad models will cost $499, $599 and $699, depending on the storage size.

All models have Wi-Fi and Bluetooth connectivity built in. Jobs said the device has a battery that lasts 10 hours and can sit for a month on standby without needing a charge.

Apple will also sell a version with pay-as-you-go data plans from AT&T in the U.S. Two tiers of data plan will be available without contracts: $14.99 per month for 250 megabytes of data, or $29.99 for unlimited data usage.

Those 3G models will cost more — $629, $729 and $829, depending on the amount of memory. The Wi-Fi only version will be available worldwide in March, and the 3G version in April. International cellular data details have not yet been announced.

Apple had kept its "latest creation" tightly under wraps until Wednesday's unveiling, though many analysts had correctly speculated that it would be a one-piece tablet computer with a big touch screen, larger than an iPhone but smaller than a laptop.

The CEO demonstrated how the iPad is used for surfing the Web with Apple's Safari browser. He typed an e-mail using an on-screen keyboard and flipped through photo albums by flicking his finger across the screen. And he showed off a new electronic book store, putting the iPad in competition with Amazon.com Inc.'s Kindle and other e-book readers.

Jobs said the iPad will also be better for playing games and watching video than either a laptop or a smart phone. The iPad comes with software including a calendar, maps, a video player and iPod software for playing music. All seem to have been slightly redesigned to take advantage of the iPad's bigger screen.

Tablet computers have existed for a decade, with little success. Jobs acknowledged Apple will have to work to convince consumers who already have smart phones and laptops that they need this gadget.

"In order to really create a new category of devices, those devices are going to have to be far better at doing some key tasks," Jobs said. "We think we've got the goods. We think we've done it."

Applications designed for the iPhone can run on the iPad. Apple is also releasing updated tools for software developers to help them build iPhone and iPad programs.

"We think it's going to be a whole 'nother gold rush for developers as they build applications for the iPad," said Scott Forstall, an iPhone software executive.

A new newspaper reader program from The New York Times and a game from Electronic Arts Inc. were also demonstrated during the event. The audience, which included many journalists and bloggers, clapped and even gave Jobs a standing ovation.

Shares in Apple rose $3.06, or 1.5 percent, to $209 in afternoon trading Wednesday. The Cupertino, Calif.-based company's shares have more than doubled over the past year, partly on anticipation of the tablet computer. Shares in Amazon rose $2, or 1.7 percent, to $121.48.

APPLE TABLET (WILL IT BE THE NEXT BIG THING?)

Three Things Apple Needs to Do to Make Its Tablet a Breakthrough Device

The din of rumor and the clamor of speculation inspired by Apple’s expected announcement is about to peak. We’re all convinced that the “one other thing” will be some kind of magical tablet device. We all expect it will be a big deal. And in these past weeks we’ve witnessed a parade of writers, analysts, and consumers who have all published their “wish” or even “guess” (or, in some cases, “fantasy”) lists. But we have yet to see what we think really matters: an Apple “should” list that identifies the things Apple needs to do to ensure that its device is successful.

Let’s put this on the record: Apple has to create a new category here—that’s something it has not done in more than two decades. Apple’s genius is its ability to consumerize a device category through great design, software and marketing. It did it with the PC, the digital music player, and the [shudder] smartphone. The coming tablet is an oddity. It is flawed in meaningful ways: It’s a computer without a keyboard, it’s a digital reader with poor battery life and a high price tag, and it’s a portable media player that can’t fit in a pocket.

As a result, Apple has to tap the 6 million people who will buy e-readers this year and/or the 7% of adults interested in buying a netbook and help them see that this new tablet is a new version of all of those things and more, where its value comes from their elegant integration into a single, awesome user experience. This is something we think Apple can do, but only if it puts the right objectives on its to-do list. We’re not rooting for Apple per se, except to the extent that Apple: 1) improves consumers’ lives, and 2) cleverly exploits market opportunities or gaps to force everyone else to elevate their game. (Note that #2 will lead to more of #1; this is a fruit of free-market economics, and we are eager to taste it.)

So into the vast cacophony of opinion that is about to get turned up past 11 (apologies to Spinal Tap), we offer the following three things we think Apple should do with its announcement tomorrow. Accompanying this recommendation is a warning: if Apple doesn’t do these things, or do them well, the long-lauded tablet form factor will remain a peculiarity.

1. Create a new device category around personal media. Today, people spend as much as five or six hours a day with media (most of it video, next with audio, then with text—younger consumers spend as much as seven hours a day on media, including social media, much of it overlapping with other media). Nowhere do they have an integrated experience that ties it all together. Of course, Apple knows it is well positioned to offer music, video, and, soon, books, magazines, newspapers and web-based opinion and commentary. However, the critical link that would make Apple’s tablet really soar is the inclusion of personal media: photos and home videos. Viewing photos is a top-five online activity, digital photography has created a whole new set of behaviors that Flickr, Picasa and others have tried to serve.

Now with the rise of Flip cameras, video is about to achieve the same prominence, but no one has a handle on it yet because it’s harder to edit, manage and share. Putting all of these personal and professional media into the device and synchronizing them intelligently across other devices with the help of the dreaded “cloud,” that’s where Apple can take it all to the next level. Importantly, personal media are by definition social media because they have to be shared to be valued. Apple needs some to do work here—social media has not been a strength. Nail this combination of professional, personal and social media, and a new device category is born.

2. Work its user-experience magic on connectivity. Among the most hotly debated questions about the tablet is what flavor of connectivity it will possess, which mobile operator(s) may play a role, and what that role may be. Today’s 3G networks simply cannot support a Kindle-like pricing model (that wraps the delivery cost into the content price) for video, nor for a concept like the rich magazine that Time Inc. has demonstrated. To accommodate the full panoply of media offerings, Apple will need to rely on a combination of home broadband, WiFi, and cellular networks to seamlessly deliver and synchronize content using a complex model that optimizes based on cost, urgency and price.

This network dance is already visible to iPhone owners who know they can only retrieve certain content over WiFi or when physically connected to their iTunes library, but it’s a clumsy dance and Apple can—and should—do better. Here’s an idea: become a Virtual Network Operator (VNO, providing connectivity services without physically operating a network)...a smart VNO. Put a multimode radio into the tablet, negotiate wholesale rates with AT&T and Verizon (and others in the future), and do arbitrage pricing across networks to reduce pricing using market efficiencies. Sure, the carriers don’t want this but if anyone can do it, Apple can. After all, you’ll already have all the other retail and service components in place.

3. Break open the meaning of the word “device.” All along, we’ve talked about this device as if it were a single form factor that would define a new era in media use and connectivity. But the future of selling devices is not in selling single devices; instead, it lies in selling device-based experiences, where families of devices work together to give consumers what they really want. That means the tablet must be introduced with a family of co-devices (not accessories, please don’t marginalize them by calling them that) that will make the device itself more flexible and therefore valuable. We’re talking Bluetooth keyboards, sure, but also a family of docks that position the tablet to be a bedside alarm clock, a bedroom Pandora radio player, a kitchen recipe stand, a family-room photo frame, and a home remote control. We’re talking about TVs that tablets can “publish to” wirelessly and HD cameras that can function in attached mode or work wirelessly from across the room—the same camera that will speak to your Mac, your iPhone, and anything else Apple makes.

There’s a lot more detail behind it, but this is our short “should” list for Apple. A list that, conveniently, applies to everyone who wants to take on or draft off of Apple as well. Amazon’s next generation Kindle should do the same (we’ve codenamed it “Kindle Flame” around here). We’ll be publishing a much more detailed analysis of the tablet market in the coming weeks once we have the full detail of Apple’s offering and can scour our consumer data for evidence of who wants—and can pay for—this kind of experience.