The next frontier

Will hand-held tablet PCs revolutionize mobile computing?

The next frontierWhen Ken Dulaney and three other tech visionaries set out to build a tablet computer nearly a quarter century ago, the idea seemed like a no-brainer. Tablets were, after all, a key piece of equipment in the 1960s television series Star Trek, which would ultimately have a decent track record of predicting future technologies such as wireless communication, biometric identification and non-invasive medical procedures, if not interstellar space travel. More importantly, tablets promised to literally put the power of a personal computer in people’s hands.

But the GridPad, a clunky 4.5-lb. machine with a green-hued electroluminescent screen and stylus, failed to take off, save for in a few niche sectors in government and health care. Several other efforts suffered the same fate. “We had a number of customers who did their work while standing or walking,” says Dulaney, who worked alongside Palm founder Jeff Hawkins on the project. 

Now an analyst at Gartner Research, Dulaney is one of the mulitude watching as interest heats up again. From hardware and software makers like Apple and Microsoft to booksellers such as Amazon and Barnes & Noble, many companies now appear to be betting the next must-have accessory will be a tablet—a hybrid of a laptop and a smart phone that can be used to view media and connect to the Internet, among other things.

The stakes are potentially huge. There are about 1.4 billion personal computers on the planet and double that number of cellphones. A single device that combines the functionality of both would seem to be the holy grail. Not surprisingly, there are also plenty of skeptics who argue there’s good reason tablets have failed to catch on. But the believers—and there are many—counter that today’s tablets will be built using much more sophisticated technology than their primitive predecessors, and that they will revolutionize the concept of the portable computer.

As with any sea change in technology these days, all eyes are on Apple, the company that changed the way people collect and listen to music with the iPod, and upended the wireless industry with the iPhone. Headed by CEO Steve Jobs, a technology tastemaker, Apple is widely rumoured to be working on a tablet computer expected to land early next year. The fact that Apple hasn’t actually acknowledged any of that has not stopped bloggers and journalists from extrapolating from bits of information leaked by equipment suppliers and other unnamed sources.

But it’s not just Apple at the centre of the tablet talk. Microsoft, whose founder Bill Gates incorrectly predicted eight years ago that tablets would be the most popular form of PC in the U.S. within five years, is also believed to be working on a tablet-like device, either on its own or with the help of various computer makers. That could include Dell, which is rumoured to be working on a “mobile Internet device” that’s bigger than a cellphone. Meanwhile, Archos, a French company, has begun selling what it describes as an Internet media tablet. And TechCrunch, an industry blog, has commissioned the development of its own “Crunchpad”—a prototype named one of the 10 most brilliant products of 2009 by Popular Mechanics magazine.

Why, exactly, has the well-worn idea of tablets suddenly been resurrected? The most oft-cited reason is the phenomenal success enjoyed by the iPhone, which is essentially a mini-computer, and the belief that there’s an underserved market of consumers who would like a similar portable device that allows them to, say, read an e-book or a newspaper, play video games, and watch a movie without ruining their eyesight. Most believe Apple’s tablet will have a screen size of about 10 inches, measured diagonally, and be equiped with touchscreen technology similar to the iPhone’s, allowing it to run the 85,000 iPhone applications that are available for users to download through Apple’s App Store. An equally compelling explanation, however, is that computer companies are becoming increasingly desperate to boost flagging desktop and notebook sales and the current price gap between smart phones and laptops represents fertile ground. Industry data shows that netbooks, which are priced anywhere from $300 to $500 and allow users to browse the Web and perform basic computer functions, continue to gain traction and now account for about one-fifth of all consumer PC sales. “Companies are looking for the next new source of growth,” says Kevin Restivo, an analyst at IDC Canada.

But just because traditional computer sales are hurting doesn’t mean consumers will necessarily pay the price to add to their growing arsenal of home electronics. Apple’s tablet, for instance, would likely cost more than a $599 iPhone (without a carrier’s wireless plan) and less than the company’s cheapest Macbook, about $1,099. Unless, that is, the next generation of tablets offers users a profoundly different experience. “If it’s going to take off in any way shape or form, it’s got to replace something,” said Restivo, noting that the iPhone is primarily a communications device while laptops tend to be more work-oriented. “But I have a hard time understanding what sort of functionality it will have.”

He’s not alone. There is relatively little consensus on what tablets could or should bring to the table. One popular theory making the rounds is that, in addition to the functions offered by an iPhone or iPod Touch, a tablet will also act as a glorified, Web-connected e-reader that lets users subscribe to top-flight publications. Sales of e-readers—another device that’s long been full of promise and lean on results—have finally started to take off thanks to the success of Amazon’s Kindle. While Amazon doesn’t release sales figures, some analysts predict overall e-reader sales will top three million this year. As a result, the space is becoming increasingly crowded. There are now devices available from Sony, Interead, Irex and the Barnes & Noble bookstore chain, which last week unveiled its Nook e-reader. The market is still niche, but the thinking is that if people are increasingly willing to buy devices to read black-and-white text, how many more would be willing to take the plunge if offered something with a dazzling colour screen and the ability also to make phone calls, browse the Net and watch videos?

It sounds like a perfect all-in-one package. But critics say there’s a hitch. According to Dulaney, a key conceptual problem with any tablet is its lack of a keyboard—the interface by which most people interact with their computers. That’s fine if the device is only to be used to view media, but consumers will likely also demand the ability to create their own content. That’s why previous tablet efforts, including the GridPad, relied heavily on things like electronic pens and handwriting recognition software. While this hurdle has seemingly been solved with the slick touch screen technology that Apple developed for the iPhone, Dulaney remains unconvinced that an iPhone-like virtual keyboard will cut it. “When you don’t have a keyboard on it, it becomes a 12-inch iPhone and not a lot of people have a need for a 12-inch iPhone.” There’s another obvious problem: you can’t stick a tablet in your pocket.

Steve Ballmer, the excitable CEO of Microsoft, was coy when asked about tablets during a recent visit to Toronto to promote the company’s new Windows 7 operating system. “Right now I think people want devices that are smaller and fit in their pocket or are big enough to be useful as a real PC,” Ballmer told Maclean’s. “I don’t think that a hole [between the two] exists in the market. Gosh knows what Apple is doing, I don’t.” He added, however, that several of Microsoft’s hardware partners already make tablet-like devices—so-called “slates,” which lack keyboards and “convertibles,” which allow keyboards to be rotated beneath a touchscreen when not in use—and can be expected to churn out new designs if consumers suddenly gravitate to the concept.

In Apple’s case, some have also expressed concern that a tablet could potentially cannibalize sales of the iPhone, which is increasingly becoming a driver of sales for the company as demand for iPods begins to fall. Apple, though, has rarely seemed as worried about product overlap as other companies. Indeed, several critics initially panned the iPod Touch as an “iPhone without the phone,” but the device nevertheless continues to sell well among those who crave the iPhone’s multimedia capabilities but balk at the pricey carrier contracts that are sold along with it. As the distinctions between cellphones and computers become increasingly blurred, Apple may simply be betting that consumers will soon buy devices according to screen size, as opposed to the category they occupy.

The irony in all of this is that it was Steve Jobs who killed the company’s earlier tablet effort—a personal digital assistant called Newton—in 1998 shortly after returning to the company he co-founded. He is also said to have thrown cold water on Apple engineers’ more recent tablet ideas by wondering what they would be used for aside from surfing the Web in the bathroom. But Jobs also knows that mobile is the future of computing, which is precisely why the company launched the iPhone two years ago.

The danger for Apple is that mounting speculation is simultaneously heightening expectations. Fuelled by strong sales of the iPhone and anticipation of what might be in the pipeline, shares of Apple have climbed by more than 100 per cent over the past year since the market crash, while the broader Dow Jones industrial average has climbed by barely 15 per cent over the same period. “The key question is whether the pace of innovation can continue,” wrote Maynard Um, an analyst at UBS Securities, in a recent note to clients. On the other hand, Apple has proven with the iPhone—one of the most highly anticipated devices in recent memory—that it can withstand the pressure and boldly go where others have been unable to go before.

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