When asked about netbooks earlier this year, Apple COO Tim Cook didn’t beat around the bush: “They have cramped keyboards, terrible software, junky hardware, very small
screens, and just not a consumer experience, and not something that we would put
the Mac brand on, quite frankly
“.

That’s fine, but the reality is that netbooks have made a huge mark on the market and have been given credit for driving much of the growth in the PC market. It’s not hard to see why: for $300 or less in some cases, consumers can have an internet-capable ‘mini-laptop‘. In this economy, it’s safe to say that many netbooks have been sold to consumers who otherwise would not have made a laptop purchase due to price considerations.

Some have questioned Apple’s decision to avoid the netbook market but a research note from analysts at Piper Jaffray suggests that Apple is likely to counter netbooks with a product uniquely its own: a touch-screen tablet costing somewhere between $500 and $700.

From the research note:

Between indications from our component contacts in Asia, recent patents relating
to multi-touch sensitivity for more complex computing devices, comments from
[chief operating officer] Tim Cook on the April 22nd conference call, and
Apple’s acquisition of P.A. Semi along with other recent chip-related hires, it
is increasingly clear that Apple is investing more in its mobile computing
franchise.

Piper Jaffray’s predictions:

  • The display will be 7 to 10 inches in size.
  • It will sport a proprietary microprocessor designed in-house.
  • The device may run on a “hybrid” OS that meshes some features from Mac OS and the iPhone OS.
  • The tablet could go on sale as early as Q1 or Q2 2010.
  • Apple might partner with wireless carriers to integrate mobile internet access right out of the box.

Lots of predictions, no confirmation, of course, from Apple. Meaning plenty of buzz.

Putting aside that speculation is speculation and analysts are often dead wrong, such a device would be interesting. Obviously it’s not going to compete head-to-head with the netbooks that consumers can purchase for $300 or less, but if Apple can produce a device in the range of $500 to $700 it could lure in consumers who have been priced out of the Mac laptop market.

Perhaps part of Apple’s marketing genius is that it competes in markets by not competing in them. After all, even though Apple will be effectively competing in the netbook market if it releases the type of tablet Piper Jaffray thinks it will, the characteristics of that product (including price) will be very different from the competition.

But netbook manufacturers won’t be the only ones who have to take notice if Apple releases a tablet. There’s also the possibility, as AppleInsider points out, that such a device would pose a threat to Amazon’s Kindle. One analyst has suggested that the Kindle will generate $1.6bn in revenue for Amazon by 2012 but if Apple jumps into the market with a tablet device that makes ebooks sexier, Amazon could find itself facing a tougher competitive landscape.

We’ll see how this plays out. One thing is for sure: there’s going to be a lot of talk until Apple confirms or denies these reports of a tablet. Marketing genius once again.

Photo credit: nDevilTV via Flickr.