By Connie Guglielmo April 1 (Bloomberg) — Apple Inc. , looking to succeed where rivals like Microsoft Corp. failed, is betting that consumers are finally ready for tablet computers, even if they have to do without some features. Bigger than a mobile phone yet less cumbersome than a laptop, the iPad — a touch-screen device that lets users surf the Web, read e-books, watch videos and play games — goes on sale starting at $499 this weekend. It won’t have a camera, support for Flash video or run multiple programs at once. “You’re asking people to take a leap of faith, regardless of how interested they are, in a category that consumers have shown very little interest in,” said Stephen Baker , an analyst with the research firm NPD Group in Port Washington, New York. “To most people, $500 is a lot of money for a product they’re not sure they need.” Apple is trying to remake the tablet — a thin, handheld computer that’s essentially a big screen without a physical keyboard. Also known as slate computers, tablets have been available since the 1990s, without ever catching on. They currently account for less than 1 percent of the personal- computer market, according to research firm Gartner Inc. The initial reviews found the iPad to be a fast device with potential as a laptop replacement, even if it lacked some desirable features. The Wall Street Journal’s Walt Mossberg said it was a better e-reader than Amazon.com Inc.’s Kindle, while USA Today’s Edward Baig called the iPad “fun, simple, stunning to look at and blazingly fast.” David Pogue , a reviewer for the New York Times, also admired the speed, though he said some users would struggle with the on-screen keyboard. Harder Sell? While many consumers will buy any new gadget with an Apple label, NPD found that 66 percent of consumers — and 60 percent of people who say they currently own an Apple product — “don’t foresee an iPad purchase in their future,” according to an online survey of 2,000 consumers age 18 and older. The survey was done between Feb. 24 and March 3, NPD said. “It’s easy to sell stuff to early adopters because they want to buy stuff,” Baker said. “It’s hard to sell to the mass market because you have to convince them what you’re selling is something new they want.” Those early adopters may number in the tens of thousands this weekend. Apple will sell as many as 200,000 iPads on Saturday and Sunday, according to Gene Munster , an analyst with Piper Jaffray & Co. in Minneapolis. Toni Sacconaghi , an analyst at Sanford C. Bernstein & Co., projects opening weekend sales of 300,000 to 400,000 iPads. That compares with the 270,000 iPhones sold in the first weekend after its 2007 debut. Apple declined to comment, said Natalie Kerris , a spokeswoman for the Cupertino, California-based company. New Market Best Buy , the largest electronics retailer, sees the iPad as a “huge opportunity,” said Wendy Fritz, the company’s senior vice president of computing. The chain will start selling the iPad April 3 at 673 U.S. stores, with another wave of inventory arriving on April 11. “We think about it as an ability to create a new market and new technology,” Fritz, 40, said in an interview. Still, it may take a year for the mass market to embrace the iPad, Munster says. While the device should run most of the 150,000 applications available today for the iPhone, some consumers will wait for new apps and content before taking one home, he says. Waiting for 3G Customers may also wait for models that support speedy third-generation wireless networks, he says. Apple plans to start selling 3G versions, which begin at $629, later in April. The iPads coming out this weekend rely on Wi-Fi to go online. The company will likely see a drop-off in demand after the early rush this weekend, Sacconaghi says. He expects Apple to sell about 5 million in the first 12 months, compared with 6.1 million iPhones in its first year on the market. Sales should pick up over time — assuming Apple extends the iPad beyond the 10 countries already announced, he says. More content and distribution partners also will help. “There is still a lot we don’t know about it,” said Sacconaghi, who predicts the device will account for 2 percent or less of Apple’s revenue in the fiscal year ending in September. “In the immediate term, iPad expectations appear overzealous, which could provide a relative short-term disappointment for investors.” Record High Apple ’s stock rose to a closing high of $235.85 last month on speculation that the iPad would be a hit. The shares, which have more than doubled in the past year, fell 85 cents to $235 yesterday on the Nasdaq Stock Market. The iPad will be the latest test of Chief Executive Officer Steve Jobs ’s marketing prowess. Since returning to the company in 1997, he has revived the Macintosh computer business, conquered the digital music market with the iPod and moved Apple into the mobile-phone arena. That’s driven sales and profit to record levels. Jobs, 55, aims to persuade buyers to pick the iPad over netbooks — scaled-down notebook computers that typically sell for less than $500. Netbooks have been the fastest-growing segment of the PC market, helping to counter a slump in overall PC demand during the recession. Jobs derided netbooks when he first unveiled the iPad in January. “They’re slow, they have low-quality displays and they run clunky old PC software,” he said. No Flash Unlike most PCs, the iPad won’t be able to run Adobe Systems Inc. ’s Flash, which is used to view online videos and animation. That may prevent iPad users from being able to watch 75 percent of the Web’s videos. Jobs has called Flash too slow and instead wants Web sites to support a standard called HTML5 — the next version of the HTML language, which is used to create Web pages. That could be a tall order, says Jeremy Allaire , CEO of online-video company Brightcove Inc. in Cambridge, Massachusetts. Flash’s dominance prevents Web sites from switching away from the software, he says. Instead, Web sites will be forced to create two versions of their videos: one based on Flash and another running on HTML5. “There’s a lot of work involved in shifting to something else,” Allaire said. “We will live in a world of diversity and great complexity for years to come.” There are also critics who dismiss the iPad as just a larger-screen version of Apple ’s iPod Touch player, which sports a 3.5-inch (9-centimeter) screen. The iPad display will measure 9.7 inches. IPad software developers say the naysayers are missing the point: size matters. ‘Tap Tap Revenge’ Bart Decrem , CEO of the iPhone game developer Tapulous Inc. , is taking advantage of the bigger screen by creating a new music game. He plans to make it available this weekend or soon after. Decrem says he’s convinced that being one of the first to release an iPhone app helped make Tapulous’s “Tap Tap Revenge” one of the top-selling programs on Apple ’s App Store. Still, it will take time for users to understand why the iPad is a better choice than a netbook or laptop, Decrem says. Apple also will fix some of the limitations of the iPad “over time,” just as it did with the iPhone, he says. When that product debuted, it lacked support for 3G networks and the global positioning system. “With the iPhone, we already knew how it fit into our lives — we all had a phone,” Decrem said. “With the iPad, the value proposition isn’t so clear. I do think over time this may be your next laptop, but I think it will take a year.” To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net
