Apple unveils $499 iPad, bets on new device class

on January 27 2010 2:56 PM

Apple Inc CEO Steve Jobs took the wraps off an iPad tablet with a lower-than-expected price tag, placing a big bet on a new breed of gadgets that aim to bridge the gap between smartphones and laptops.

Jobs, who returned to the helm last year after a much-scrutinized liver transplant, took the stage at packed theater on Wednesday and showed off a sleek, half-inch thick tablet computer with a 9.7-inch touchscreen. It can run movies, books, games and a gamut of applications.

The iPad will sell for as low as $499 for 16 GB of storage. An extra $130 is needed to equip it with third-generation wireless capability. Apple announced a data plan with AT&T Inc, which appeared to have beaten out Verizon Wireless for the deal.

What once occupied half your living room can now be dropped in a bag, said NPD analyst Ned May. It's pulling together a variety of needs (in) a universal entertainment device.

Shares of Apple were up 1.7 percent after the pricing details were announced to trade at $209.40, within reach of their all-time high of $215.59 logged on January 5

Apple hopes to sell consumers on the value of tablet computing after other technology companies, including Microsoft Corp and Toshiba Corp, have failed to do so in recent years.

The tablet is Apple's biggest product launch since the iPhone three years ago, and arguably rivals the smartphone as the most anticipated in Apple's history.

Culminating months of feverish speculation on the Internet and among investors, Jobs took the stage at a jam-packed theater in San Francisco and, with his famed showman's flair, began displaying the device's features.

Jobs said there was a need for a new type of device that would sit between a smartphone and laptop computer, and that can perform tasks like browse the Web, play games and display electronic books.

If there's going to be a third category of device, it going to have to be better at these kinds of tasks, he said.

The iPad has a near life-sized touch keyboard and supports Web browsing. It comes with a built-in calendar and address book, Jobs said, calling it awesome.

Despite the buzz surrounding the launch and Apple's storied golden touch on consumer electronics, the tablet is not necessarily an easy sell, analysts say.

Consumer appetite for such a device category has yet to be proven, although plenty of devices such as Amazon.com's Kindle e-reader are vying for that market.

Shares of Apple have generally risen ahead of Wednesday's event. The stock, which was down ahead of the pricing details, was up about 1.9 percent at $209.80 in afternoon trading.

As iPod sales wane, Apple is looking for another growth engine and hopes to find one in the tablet. But the move is not without risk. Consumers have never warmed to tablet computers, despite many previous attempts by other companies.

In an online poll on reuters.com, 37 percent of more than 1,000 respondents said they would pay $500-$699 for the tablet. Nearly 30 percent weren't interested, while 20 percent said they would pay $700-$899.

Analysts' sales predictions for the tablet vary widely, with many believing Apple can sell 2 million to 5 million units in the first year.

(Reporting by Gabriel Madway, Alexei Oreskovic; Writing by Edwin Chan; Editing by Richard Chang and Tiffany Wu)

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