Apple holds its cards close to its chest and stamps violently on leaks to the press. What it cannot stop is press leaks from suppliers, as evidenced by yesterday’s story in Taiwan’s Commercial Times. The paper reported (in Chinese) that a touch-panel supplier, Wintek, will be building netbook size panels for Apple some time in the second half of this year. The report also suggested that Quanta Computer will assemble the device.

The Commercial Times has proven to be a reliable source of Apple rumor in the  past, so the report is very likely accurate. But Apple is no fan of the current crop of netbooks.

Steve Jobs proclaimed (in October last year): “We don’t know how to make a $500 computer that’s not a piece of junk.”

He added: “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.”

Tim Cook, Apple COO currently standing in for Jobs said (in January this year): “They [netbooks] 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.”

The Apple Not-A-Netbook

Apple’s product culture and tendency to innovative suggests that Apple is not actually building a netbook by any normal definition of the term. After all,  Apple doesn’t build PCs by any normal definition of the term. Here’s 10 pointers to how it probably maps out:

1. Apple is the last major “Netbook hold out” company and cannot hold out any more. Why? The initial netbook market, pioneered by Asus and Everex, was a barebones micro-laptop market with very thin margins. It was the poor man’s laptop market. However, the netbook has now been around for two years, not just surviving but thriving. Dell, Acer, HP and Lenovo have been dragged into the market. Innovation is now starting to happen and for the simple reason of self-defense Apple cannot hold out any longer, it has to come in.
2. The Apple will not make a poor man’s laptop. Why? Apple doesn’t make a poor man’s anything.
3. Apple will introduce a product that will sell in the $500 to $800 price range. Why? Netbooks occupy the $300 to $700 price range and are selling in the tens of millions. This is too lucrative a market for Apple to ignore. Apple’s device will inevitably sell at a premium to other “comparable” devices.
4. Apple will be defending OS X with its netbook. Why? The netbook has blown open the OS market in the wake of the success of OS X. Right now in the netbook market Microsoft is desperately trying to push the Linux imp back into the bottle, but the Netbook vendors are not playing. Not only are they thinking “out of the bottle” they are also thinking Google Android and Good OS and maybe even Symbian. An OS war is brewing and Apple needs to mark out its territory.
5. The Apple Netbook will not be a netbook. Why? Jobs said it all when he noted that “One of our entrants into that category is the iPhone, for browsing the Internet, and doing email and all the other things that a netbook lets you do.” The Apple not-a-netbook will have a touch interface, do all the office apps, browse the Internet and play games. In other words it will be a supersized iPhone rather than a downsized MacBook. It may be mobile-ready with a mobile contract being an optional part of the deal (if only to broaden the number of retail outlets that will carry the device.)
6. The Apple “Not-a-netbook” will be media ready. Why? Well duh. Death to portable DVD players, long live the iTunes store. This will be a differentiator and it ties in with the natural Apple growth strategy.
7. The Apple “Not-a-netbook” will come in two models. Why? It will be an all memory device with, probably two screen sizes and two memory sizes allowing Apple to span the market with 2 price points. The initial price points will be high, with Apple soaking up initial demand before deciding the real price points at which to sell.
8. The Apple “Not-a-netbook” will run apps from the Apple App Store. Why? How do you differentiate the Apple product from every other netbook in one fell swoop? Provide it with cheap apps from the App Store. The price of app store apps makes the competition groan.
9. The Apple “Not-a-netbook” will not have a keyboard. Why? Well first of all, a keyboard costs money and a fold-in keyboard drives up the price. Apple will want this to be its tablet device – giving Apple an immediate foothold in the tablet market. Most likely there will be an on screen keyboard that, because of size, works a great deal better than the iPhone-sorry-excuse-for-a-keyboard. Probably also you’ll be able to buy an external-if-you-really-must-have-one keyboard.
10. The Apple “Not-a-netbook” will bridge the iPhone to the MacBook. Why? Apple needs to be able to provide a natural upgrade path from the touch iPod to the iMac, through OS X. Since OS X runs on all these devices, it merely has to determine the interface, which cannot be iPhone exactly (too limiting) but could easily be closer to the iPhone than the iMac, using iPhone icons and the touch screen interface. It will be no-mouse machine. The usual Apple design principles will apply.

I may not have got all of this right, but I doubt if I’m far wrong, because most of this is just a logical extension of where Apple is already heading.