By Connie Guglielmo Jan. 27 (Bloomberg) — Apple Inc. , seeking to revolutionize the publishing business in the same way the iPod transformed the music industry, unveiled a tablet computer starting at $499, a price that was 50 percent lower than some analysts predicted. The iPad can display full Web pages, books and iPhone applications, and has a touch-screen keyboard that’s almost full size, Chief Executive Officer Steve Jobs said today at a company event in San Francisco. A 16-gigabyte version will sell for $499, while a 32-gigabyte model costs $599. Apple rose in Nasdaq trading after the announcement, erasing an earlier decline. “At that price, they’ll sell millions,” said Hakim Kriout , a portfolio manager at New York-based Grigsby & Associates, which owns Apple shares. “It’s very, very affordable for what it does. This is going to add a huge revenue stream for Apple.” Jobs, 54, has spent the past decade transforming the maker of the Mac computer into a consumer-electronics juggernaut. The iPad builds on the digital media and mobile technology behind Apple’s market-leading iPod and the iPhone, and will challenge dedicated e-book readers from Amazon.com Inc. and Sony Corp. The iPad is “our most advanced technology in a magical and revolutionary device at an unbelievable price,” Jobs said. The iPad, which has a 9.7-inch (25-centimeter) screen, is half an inch thick and weighs 1.5 pounds (0.7 kilograms). Kindle Price Amazon.com’s Kindle, the market leader in electronic books, costs $259 for a version with a black-and-white 6-inch display. A model with a 9.7-inch screen costs $489. Toni Sacconaghi , an analyst at Sanford C. Bernstein & Co. in New York, had predicted that the Apple tablet would cost about $750. Sony’s most expensive e-reader, which has a wireless connection and a 7.1-inch screen, costs $399.99. Smaller models sells for $299.99 and $199.99. Apple unveiled an electronic-book reader application for the iPad and is opening an e-book store. Pearson Plc’s Penguin, Harper Collins Publishers, CBS Corp.’s Simon & Schuster, Macmillan and Hachette Book Group have already signed deals to offer electronic books on the iPad. Apple, based in Cupertino, California, rose $2.12 to $208.06 at 2:25 p.m. New York time in Nasdaq Stock Market trading . The shares, which more than doubled last year, climbed to a record $215.04 earlier this month on speculation that the tablet was coming. AT&T Service The device supports Wi-Fi communications and runs the more than 140,000 applications already available for the iPhone and iPod Touch. It also works with wireless service from AT&T Inc., the U.S. carrier for the iPhone, though no contract is required. Apple said there will be two iPad wireless data plans from AT&T in the U.S. One will cost $14.99 and give users up to 250 megabytes of data downloads. The other will have unlimited data and cost $29.99. The company is also working on international wireless plans. The device, made of aluminum and glass, can display maps from Google Inc. , and has calendar and address-book functions. It also lets users display thumbnail views of photos. The iPad has a 1-gigahertz chip that was custom designed by Apple and battery life of 10 hours, Jobs said. “My question is how big of a market this is, and it’s probably reasonably big,” said Michael Yoshikami , an analyst at Walnut Creek, California-based YCMNet Advisors. “I’m still getting my hands around how many people are going to want something of this size.” How Many? Apple could sell as many as 4 million tablets this year, Katy Huberty , an analyst with Morgan Stanley, told investors earlier this week. Sacconaghi had predicted sales of 3 million devices in the first year, based on a selling price of $750. Other analysts were aiming higher. “The first year for iPhone and iPod achieved 6 million units in sales — we think the tablet will achieve the same level of sales the first year of launch,” Ashok Kumar , managing director at Northeast Securities Inc., said before the announcement in a Bloomberg Television interview. “The question has arisen lately: Is there room for a third category of device in the middle, something that’s between a laptop and smartphone,” Jobs said. “Those devices are going to have to be far better at doing some key tasks. What kind of tasks? Well, things like browsing the Web, doing e-mail, enjoying and sharing photographs, watching videos, playing games.” Apple, which reported a 32 percent jump in holiday sales this week, said the Mac accounted for 28 percent of revenue. The iPhone brought in about a third of sales, while the iPod represented 22 percent of revenue. Apple has sold 250 million iPods, Jobs said today. IPod Slowdown Demand for Apple’s traditional iPod music players is falling as consumers switch to multifunction devices like the iPod Touch, which has Wi-Fi support, and smartphones that can also play music and video, like the iPhone. IPod shipments fell 8 percent last quarter to 21 million units. Sales of the iPod Touch rose 55 percent. With the tablet, Apple gets a new category built around its iTunes software and store. That gives the company a fresh way to attract consumers, video-game makers and other application developers, as well as publishers looking to capitalize on their content. Apple executives in the audience included Chief Operating Officer Tim Cook and marketing vice president Phil Schiller . Former U.S. Vice President Al Gore , an Apple board member, was also at the event. To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net
