Apple 2.0

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What's Wintek making for Apple? - Update

March 10, 2009: 7:24 AM ET

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UPDATE: The Wall Street Journal's Taipei bureau weighed in on this rumor Monday evening, adding screen dimensions that were missing from the original report. See below.

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The Chinese-language Commercial Times reported Monday that Wintek, a Taiwanese maker of LCD displays, will supply touchscreen panels for a mysterious new Apple (AAPL) product, with shipments to begin the second half of the year.

What that product might be is not clear -- even Wintek says it doesn't know. But according to DigiTimes, the Taipei-based daily that carried the report in English, Commercial Times claims Apple is building "netbooks" for release later this year and that Quanta Computer, one of Apple's favorite suppliers, will be assembling them.

That's a claim that should be treated with some skepticism.

First of all, as MacRumors points out, the track record of Commercial Times when it comes to predicting Apple's products based on supply chain reports is mixed at best.

Second, the netbook market is one that Apple has managed to avoid -- at least for now -- to the benefit of its bottom line.

Netbooks, for anyone who hasn't been tracking recent computer sales trends, are low-cost sub-notebook sized computers designed for e-mailing, Web browsing and remote access to Web-based applications. They've been selling like crazy lately, driving down the average selling price of companies like Hewlett-Packard (HPQ) and Dell (DELL) while shrinking already slender profit margins. (See Apple so far immune to PC price "collapse.")

The question of when Apple is going to move into this market has come up at every quarterly analyst call since last fall.

"We don't know how to make a $500 computer that's not a piece of junk," Steve Jobs said last October, when asked if users were going to see cheaper computers from Apple. "Our DNA will not let us ship that."

Asked directly about the netbook market, he was dismissive. "We'll wait and see how that nascent category evolves, and we have got some pretty interesting ideas if it does evolve," he said. Besides, he added, Apple already has a product that fits the bill.

"You know, one of our entrants into that category if you will is the iPhone, for browsing the Internet, and doing email and all the other things that a netbook lets you do. ... An iPhone is a pretty good solution for that, and it fits in your pocket."

Asked again in January about how Apple plans to respond to the market for netbooks, now that it's taking off, acting CEO Tim Cook echoed Jobs' remarks. Netbooks, he said, are "principally based on hardware that's much less powerful than we think customers want, software technology that is not good, cramped keyboards, small displays."

"We don't think people will be pleased with those products," Cook added. "It's a category we watch, we've got some ideas here, but right now we think the products are inferior and will not provide an experience to customers they're happy with."

So what is Wintek making for Apple, if not touchscreens for a netbook?

Since the dimensions of those screens were not provided, it could be almost anything, from a high-end iPhone to an oversized iPod touch to a  Newton-type tablet computer.

It could even be a netbook. But if it is, we suspect it won't be a piece of junk. And we're pretty sure it won't sell for less than $500.

UPDATE: Late Monday, the Dow Jones Newswire added fuel to the Apple netbook rumor with fresh details provided by two-unnamed sources:

"The mini laptop computers will likely have monitor screens that are between 9.7-inches and 10-inches, one person, who declined to be named, said.

"Another person said other specifications and functions are still under evaluation." (link)

[Image of an imaginary Apple touchscreen netbook courtesy of Gizmodo.]

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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