Production is starting and should hit mass-market stride in February, says an analyst

Artist's rendition of an Apple tablet computer, with iPhone. Credit: AppleInsider

"The manufacturing cogs for the tablet are creaking into action," writes Oppenheimer's Yair Reiner in a note to clients issued Wednesday morning.

According to his supply chain sources, Apple (AAPL) appears to be gearing up to build as many as 1 million tablet computers per month. Assuming the company would need 5 or 6 weeks of inventory before going live, that suggests — barring production hiccups — a March or April 2010 launch.

Among the other "tidbits" Reiner says he's picked up:

• Apple has settled on a 10.1-inch multi-touch display using the iPhone's LTPS LCD technology, not the considerably more expensive OLED technology suggested in earlier reports.
• Apple has been approaching U.S. book publishers with what Reiner describes as "a very attractive proposal" for distributing their content: an App Store-type 30/70 split (30% for Apple) with no exclusivity requirement. [See UPDATE below.]
• According to Reiner, publishers are disgruntled by Amazon's (AMZN) terms, which force exclusivity, disallow advertising and demand a "wolfish cut" of revenue. The typical Kindle/publisher split, he says, is 50/50, rising to 30/70 if Amazon gets exclusivity.
• Apple's tablet would make ebooks more attractive for the education market by simplifying functions such as scribbling marginalia.

"We have not adjusted our model to show the impact of the tablet," Reiner concludes, "but we believe it will be substantial. Conservatively assuming 1M-1.5M units per quarter at an ASP of $1,000 and a corporate average net income margin of 22%, the tablet could contribute $0.25-$0.38 of incremental EPS per quarter."

An average selling price of $1,000 seems a little steep for the college market. But if Reiner is right about the timing, we'll find out soon enough.

UPDATE: In an interesting twist that might be related, the Wall Street Journal reports today that Simon & Schuster is delaying by four months the electronic-book editions of about 35 leading titles coming out early next year, and that a second publisher, Lagardere SCA's Hachette Book Group, has similar plans in the works. According to the Journal, S&S is "taking a dramatic stand against the cut-rate $9.99 pricing of e-book best sellers."

For more artists' renditions of what Apple's unnamed and unannounced tablet computer might look like, see Silicon Alley Insider's gallery here.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

But some people may not be getting the computers they hoped for this holiday season

Image: Amazon.com

On the eve of Cyber Monday, Apple (AAPL) Macs held the top three spots on Amazon's (AMZN) "Most Wished For" laptop list, as well as the top four spots on the desktop computer wish list.

But wishes are not horses — or premium-priced Macs — and judging from Amazon's "Most Gifted" lists, some of those Christmas wishes might be filled by more affordable Microsoft (MSFT) Windows machines.

On the laptop "Most Gifted" list, the top two spots Sunday morning went to a $549.99 Toshiba Satellite and $418.98 Acer Aspire, respectively. The $1,199 MacBook Pro had been pushed to No. 3.

On the desktop computer "Most Gifted" list, three of the top four were still Macs, but a Hewlett Packard (HPQ) Compaq had moved into the No. 2 spot.

On Amazon's "Bestseller" lists — a broader measure of what's being purchased on America's largest online retail store — no Macs topped either list Sunday morning. But four Macs were among the top 10 bestsellers for both laptops and desktops.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Will tomorrow’s PC be a nimble netbook or a high-def laptop? Google and AMD recently offered opposing views.

If Google has its way, the mainstream PC of the future will be a lot simpler than the one you’re using right now.

Like a TV, it will turn on almost instantly instead of taking nearly a minute to boot up. It will do everything through a web browser, pulling down most programs and data from the Internet. It’ll make do with a low-cost processor and will carry a cheap price tag – kind of like today’s stripped down netbooks, only with even fewer frills.

That’s just Google’s (GOOG) vision. A few miles down the road from the search giant’s Silicon Valley headquarters, the folks at chipmaker Advanced Micro Devices have a very different idea.

AMD is wagering that the majority of tomorrow’s shoppers will want more performance from their PCs. It is putting the finishing touches on a new chip that combines a microprocessor and a graphics core in one – a trick it hopes will attract consumers who want smooth high-def video and rich 3D gaming in a slim, low-cost package.

Who’s closer to the mark?

Of course, it’s too soon to tell. But before long shoppers will get to vote with their wallets.

Last week Google engineers showed off an early version of their browser-based Chrome operating system, what they call “a better model for personal computing.” (When it’s broadly available, Chrome will come pre-installed on netbooks that are specifically designed to run it.) A few days earlier, AMD announced that its Fusion processors would arrive in 2011. If all goes as planned, the two technologies will be duking it out on retail shelves in a little more than a year.

The contrasting ideas from Google and AMD come at a turbulent time for the computer industry.

Sales have slowed in the global recession, pressuring the PC revenues of stalwarts like Hewlett-Packard (HPQ) and Dell (DELL). Hardware profit margins have also suffered as bargain shoppers shun higher-priced machines in favor of netbooks with small screens, modest horsepower and low price tags. (The exception is Apple, which has somehow managed to keep selling premium PCs in a historic recession. Go figure.)

The big question is where the industry’s next stage of growth will come from. Will consumers shift their dollars toward wireless computing devices that resemble Amazon (AMZN) Kindles, Apple (AAPL) iPhones and Google Chrome-powered netbooks? Or will they find reasons to keep buying full-blown computers?

Google argues the former. While Windows PCs won’t go away, Google’s thinkers believe a lot of folks would be happy with a simpler, more affordable computer that just gets them online. Considering how netbooks have become the hot ticket in the PC business lately, Google may have a point.

But there’s also evidence that consumers aren’t ready to give up our software-packed PCs anytime soon. As we continue to accumulate gadgets like Flip video cameras and iPhones, we’ll need more powerful computers to manage the digital content – something a basic Chrome OS device won’t be able to do.

Brisk sales of Windows 7 and Apple’s (AAPL) Snow Leopard operating system also prove that the PC-buying public can still get excited about slick-looking operating systems that use 3D effects and animation to help users get things done. That’s a welcome sign for a company like AMD, which has bet its future on the notion that the world will keep its healthy appetite for computers with some horsepower.

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Ben Foss, director of access technology in Intel's Digital Health Group, uses the Intel Reader to scan a book. Photo: Jon Fortt.

When Ben Foss's father in law was dying of liver cancer months ago, friends suggested Foss read "How We Die" to help the family with the grieving process. Foss has dyslexia, and finding an audio version of the book or scanning it into a computer typically would be an ordeal. But in this case he was able to plow through it at 250 words per minute.

Foss did it with an early version of the Intel (INTC) Reader, a $1,500 device he dreamed up along with colleagues in Intel's Digital Health Group. The device launches today as the first consumer product from the five-year-old group. And though its name seems to place it in the same category as trendy ebook readers from Amazon (AMZN), Sony (SNE) and Barnes & Noble (BKS), this reader is profoundly different.

This is not another thin tablet that displays text; instead it's more like a chunky digital camera that instantly captures the words on a printed page and pronounces them aloud. That makes it little more than a curio for mainstream gadget lovers, but a potential godsend for those who struggle to read standard text because of learning disabilities or vision problems.

The reader also poses a real risk for the world's largest chipmaker. Most of its previous forays into the electronics world have ended badly. Intel generally has thrived when it has focused on its core business of providing computing brains, to others and foundered when it has tried to design and market its own finished products.

But as demand for traditional PCs has slowed, Intel has resolved again to target non-traditional areas for growth. In healthcare technology, executives believe they have found a niche where they can build innovative products that medical professionals and consumers will pay a premium to use. The Intel Reader is poised to provide a high-profile test of that strategy – and it delivers a strong first impression.

The Intel Reader has a 4.3-inch LCD display, 4 gigabytes of flash storage and USB slots for adding more. It weighs 1.38 pounds. Image: Intel.

Perhaps that’s because for Foss, the reader is far more than just another project – it’s part of his life’s work. The 36-year-old's learning disability has driven him to work for decades on more convenient ways to get information off the page and into his head. “They say necessity is the mother of invention, but it’s not,” Foss says. “Frustration is.”

Foss lived as a frustrated reader for years. In high school, his mother read aloud to him to help him process the information in assignments. In law school, he scanned book pages onto his laptop and had text-to-speech software play them back to him as he rode a bike to class. Now technology has advanced enough that, along with a team of Intel designers, engineers and software architects, he was able to squeeze a scanner and a digital reader into a device about the size of a paperback novel.

On the outside, the Intel Reader doesn’t look like breakthrough technology. Next to an iPhone, it looks like a museum piece – maybe a mid-90's digital camera prototype. But unlike Apple's (AAPL) iPhone, Intel’s reader isn't designed for the mass market. The finished product is the result of untold hours of tweaking; Foss carved the first prototype from a Styrofoam beer cooler more than two years ago.

Inside there's some impressive technology, including an Intel Atom processor and a Linux-based operating system. Simple menus on a high-contrast screen cater to low-vision users. A thick battery guarantees 4 hours of unplugged use and 30 hours of standby time. A 5-megapixel camera on the bottom of the reader captures images of pages; optical recognition software converts the images into digital text. Text-to-speech software creates an audio file that users can transfer to another device or play aloud on the reader at an adjustable pace.

The slow setting goes below 120 words per minute. The fast setting blazes along at 250 words per minute – a less frustrating pace for speed listeners like Foss.

follow me on Twitter: twitter.com/jonfortt

Remember how cloud computing was supposed to kill client/server? Turns out it’s more of a wedding than a funeral.

First, some background: The hype surrounding cloud computing in recent years has been nothing short of wild. If you believed the popular wisdom, the traditional computing model was toast. Businesses were going to stop loading specialized programs onto workers’ PCs and buying expensive software and servers for data centers.

Instead, we’d have the cloud. Service providers like Salesforce.com (CRM) and Amazon (AMZN) would own the hardware and software, and let companies plug in over the Internet and use it on demand.

Things aren’t working out that way. A survey commissioned by Avanade, a joint venture between Microsoft (MSFT) and Accenture (ACN), shows that enterprises are taking a more cautious approach to cloud computing. While 62% of the 500-plus executives surveyed said they plan to increase their use of cloud-based software over the next year, they had no intention of simply shipping their proprietary data out to some third-party service provider n the process. Some 80% of U.S. enterprises will instead embrace what’s being called a “hybrid” cloud model – they’ll let third parties handle basic stuff in external clouds, but keep vital information on company-owned servers inside the firewall.

Meanwhile, tech titans are also taking aim at the “everything in the cloud” crowd. According to a CNET report, Hewlett-Packard CEO Mark Hurd this week said that security is a major issue that doesn’t get enough attention in the cloud debate; if HP CIO Randy Mott told him he wanted to put the company’s financial records in the cloud, “I’d say, ‘Go back to work, we’re not doing that.’” Oracle (ORCL) CEO Larry Ellison has also taken shots at cloud boosters.

It might be tempting to dismiss all this as self-serving resistance from the old-school techs – but even the biggest cloud cheerleaders are now embracing the hybrid concept. On a stage near the Oracle Openworld conference last week, Salesforce CEO Mark Benioff embraced Dell (DELL) CEO Michael Dell to announce a partnership to sell customers on the hybrid cloud idea – an initiative called “The Best of Both Worlds.”

For Benioff, who until now has marketed Salesforce with a “Software is Dead” slogan, that’s quite a shift. But since enterprises aren’t about to ditch their client/server IT investments and put all their secrets on the Internet, it’s also a wise one.

Barnes & Noble eReader, the Nook

If you're the type of early Christmas shopper who bought a Kindle last week, I hope you kept the receipt, because a newer, equally affordable option is about to hit shelves.

Barnes & Noble (BKS) CEO Steve Riggio on Tuesday took the stage before hundreds of authors, agents, publishers and pundits to debut the company's electronic reader, the Nook.

The Nook will sell for just $259, a steep discount from competitors like the Sony (SNE) Reader and the iRex DR800SG , which both retail for $399. The price suggests Barnes & Noble is going straight for Amazon (AMZN), which recently lowered the Kindle's price to $259.

The Nook uses the same screen technology that powers Amazon's Kindle, but adds an iPhone-like color touchscreen below for easy navigation. Readers have access to 3G wireless on AT&T's broadband network.  The reader holds up to 1,500 books (like its major competitor), but an expandable memory slot allows readers to add up to 17,500 more. "You're getting a lot of eReader for the money," says Sarah Rotman Epps, an analyst with Forrester Research.

Another novel experiment: lending. Barnes & Noble lets readers share titles with friends on any platform in the Barnes & Noble ecosystem. So you like the "Tipping Point?" Buy it for your Nook and lend it to your sister to read on her Barnes & Noble iPhone application. (She'd better not procrastinate; she has 14 days before it disappears.)

Barnes & Noble will turn its massive retail presence into a competitive advantage. Over the next few weeks, the bookstore chain will roll out Nook displays in its 700 stores and 600 college bookstores. Through complimentary Wi-Fi connections in all the stores, readers will be able to browse eBooks on their readers just as they might have always browsed the shelves.

The eBook market is tiny, but its growth has been explosive this year. eBook accounts for less than 2% of traditional book sales, but the $16.2 million in sales for July, for example, represented a 213% increase over a year ago, according to Forrester Research.

Right now Amazon has 60% of the market, but the eReader is expected to be a popular Christmas item this year, and Barnes & Noble plans to get in on that opportunity.

Pre-orders for the Nook will begin this week, and the company says it will begin shipping in late November.

The large bookstore has been lunging into the eBook market at full force. It purchased independent eBook seller Fictionwise earlier this year and launched its own eBook store in July. It has also unleashed a series of smartphone applications, with more planned.

While there's no guarantee Barnes & Noble will succeed, it's a necessary move as the book market becomes increasing tough to navigate.

Traditional books — the kind you bring to the beach and lug on the subway — are getting much cheaper.

In the last week, Amazon, Wal-Mart (WMT), and Target (TGT) have begun selling some of this year's hardbacks that are anticipated to be the most popular — books like Stephen King's "Under the Dome " ($35.00) and Sarah Palin's "Going Rogue" (list price: $28.99) — for roughly $9 on pre-orders.

Sure, it's typical to discount bestsellers, especially during the holidays, but few retailers are bold enough to bring down the prices by more than 50%. Barnes & Noble must now hope the Nook masters its niche.

Apple (AAPL) is up, as are Google (GOOG), Amazon (AMZN) and to a lesser extent Research in Motion's (RIMM) BlackBerry.

Microsoft (MSFT), Dell (DELL) and Yahoo (YHOO) are down.

Such are the high-tech highlights of the 2009 edition of Interbrand's annual listing of the top 100 "best global brands."

Google (up 25%) is the big winner, followed closely by Amazon (up 22%). Dell (down 12%) was the biggest loser.

Apple, whose name is now valued by Interbrand at $15.443 billion, up $1.6 billion (12%) from last year, jumped four places to break into the top 20 for the first time.

"The recession won’t take a bite out of this Apple," wrote Interbrand, employing a metaphor that's not exactly brand new. "Declining Mac sales and fears for the company’s future without brand visionary Steve Jobs, were outweighed by record high iPod sales, doubling sales for the iPod Touch, and all-time high market share for Mac OS software. Price might be a barrier for cost-conscious consumers, but Apple responded quickly with high margin, low-priced products like the US $99 iPhone and a new, voice-activated iPod Shuffle."

Below the fold: The tech results in bar graph form.

Source: Interbrand

Interbrand, a division of Omnicom (OMC), is a consulting firm that has been estimating the value of the biggest brand names for 20 years. For a description of their methodology, click here.

Tyrese Gibson's Mayhem is a comic book – the first standalone print publication for sale in Apple's iTunes LP format.

Tyrese Gibson’s Mayhem is the first digital book for sale on iTunes 9 – perhaps an early sign of Apple’s (AAPL) desire to take on Amazon’s (AMZN) Kindle and Sony’s (SNE) Reader in the digital book market.

I would have missed the significance of Mayhem on iTunes if I hadn’t run into Gibson himself on Wednesday. After the Steve Jobs iPod keynote, I spotted the actor/singer known for roles in action movies like Transformers 2 in the demo area where attendees were playing with the new iPods and software. He had a laptop open and was doing a few TV interviews about his Mayhem project, and its debut on iTunes.

Gibson isn’t the first person you’d expect to make a mark in the comic book business. For one, he’s not a longtime comic book fan – he only recently got interested in the medium while attending the Comic-Con convention to promote the movie Death Race. After seeing the devotion of die-hard fans there, he was determined to get in on the action – and he conceived of Mayhem, a vigilante tale with a diverse cast of characters.

Take a look at the Mayhem comic iTunes LP ($1.99), and it’s easy to see the potential of book or magazine sales over Apple’s digital store. For starters, Apple has amazing reach – there are more than 100 million iTunes accounts connected to credit cards, which is a sizable audience. In the Mayhem iTunes LP itself there is a beautiful flow to the action; new panels zoom into the foreground as others fade away.

And it’s not just text and images; both audio and video come along with the package. The interface is designed so that it would obviously work nearly as well on a touch-sensitive tablet – or even on an iPhone – as it does on a full-fledged PC.

Perhaps that’s because Apple itself had a hand in designing this digital version. While hanging out with Gibson, I also briefly spoke with the two creators of the Mayhem iTunes LP, Sam Herz, one of Apple’s user interface engineers for the iTunes Store, and Barry Munsterteiger, creative director for rich media and Internet technologies.

The pair said that while working on Mayhem, they created some tools based on standard web technologies like HTML, Javascript and CSS that others might be able to use to create iTunes LPs. But they’ve since turned over their work to higher-ups at Apple, and they’re not sure what will happen to their work.

They might not know, but we can hope: Though CEO Steve Jobs has publicly talked down the idea of Apple building an e-book, he hasn’t closed the door on a multi-purpose device that does the same thing – something that might look like an oversized iPod touch. Maybe the tools Apple created to digitize Gibson’s Mayhem comic will be part of an author’s kit with that oft-rumored Apple tablet?

Microsoft, Yahoo and others band against Google – using familar tactics.

By Jia Lynn Yang, writer

With its friendly, helpful image and total dominance in search, Google (GOOG) makes it all look so easy. Meanwhile its enemies are just sweating harder to take it down.

There are reports today  that Microsoft (MSFT), Yahoo (YHOO), Amazon (AMZN) and others are banding together to block a settlement Google made last fall with authors and publishers for its Book Search service—the same settlement that’s being scrutinized by the antitrust cops over at the Justice Department.

The Open Book Alliance, as the coalition is called, is simply the latest chapter in a war against Google that’s increasingly being fought in DC rather than California.

Witness what happened last fall when Google tried to seal a search advertising deal with Yahoo. For months, Microsoft campaigned mightily to block the deal by convincing the Senate Antitrust Committee to hold hearings and by enlisting the support of advertisers. In the end, the DOJ decided to file an antitrust case, and Google hastily pulled out of the deal.

And it’s not just Microsoft going toe to toe with Google in DC. Google’s widening reach has only lengthened its list of nemeses. Telco and cable companies don’t like Google’s support for net neutrality, a principle that broadly would prevent internet service providers from favoring certain web sites, no matter how much or what kind of data was being streamed. The telcos say that while they’re building out expensive broadband networks, Google gets a free ride.

Google also ran into opposition in DC recently when it tried to convince the Federal Communications Commission to allow unlicensed “white space” spectrum to be used for wireless broadband. The National Association of Broadcasters didn’t like that effort either. Google’s stance seems to be that its competitors are just fearful of fighting fair and square.

“The Google Books settlement is injecting more competition into the digital books space, so it’s understandable why our competitors might fight hard to prevent more competition,” says Gabriel Stricker, Google spokesperson, in a statement. And it’s not just Google’s search dominance that will be hard for Microsoft et al to topple. The company also boasts the world’s top brand, according to the market research firm Millward Brown—-meaning it’s an uphill battle for Google’s enemies to put a dent in the company’s glowing, benevolent image.

That’s not stopping them from going for the jugular though. In Washington, the knives are out.