Apple iPad: Oversized iPhone or a new device format?

The Apple iPad has a 9.7in multi-touch screen and will run iPhone apps

Tablets are the mobile computer format of the future, and are set to become the most popular style of PC within five years.

This prediction came not from Apple chief Steve Jobs as he unveiled the iPad on Wednesday, but from former Microsoft boss Bill Gates when he introduced Microsoft's Tablet PC concept to the world in 2001. Despite that forecast, Windows-based tablets have remained little more than a niche product for vertical markets. Can Apple succeed where Microsoft did not?

On the face of it, the Apple iPad is somewhat of a disappointment after the huge tidal wave of hype that built up during the months preceding the announcement. With its 9.7in multi-touch screen and compatibility with iPhone applications, the new device looks like an oversized smartphone rather than the ground-breaking new category of device that Jobs described it as.

However, it is always dangerous to underestimate Apple and the power of its marketing. The company has already given a makeover to all-in-one computers with its iMac line, to portable music players with the iPod, and to smartphones with the iPhone. All of these device categories existed before Apple decided to introduce its own version, yet the company managed to make its products more appealing than those of its rivals.

Moreover, Apple's success has been built on pairing its devices with compelling services such as iTunes for the iPod and App Store for the iPhone. The iPad extends this, supporting both of these plus its iBook application and iBookstore that let the user download and read e-books in the same format used in Sony Reader devices.

Some analysts also believe that there is potential for a new device format that fits between smartphones and netbooks. A report from research firm Deloitte LLP dubbed this category 'NetTabs', and predicted there will be a market for these as a consumer-focused device used primarily for media and web browsing.

"These devices have an advantage over smartphones, which are small for watching videos or web browsing, and notebooks, netbooks and ultra-thin PCs, which are too heavy or expensive," the report stated.

The iPad fits neatly into this description, but this could prove to be its undoing as much as playing to its advantage; the iPad looks like either an overgrown smartphone or a tablet PC running a phone operating system.

For example, the new device is based on an ARM processor and runs a very similar platform to the iPhone, allowing Apple to claim that there are about 140,000 applications already available for the iPad.

But the flip side of this comparison is that the iPhone can do pretty much everything the iPad can, but can also be used to make voice calls, a function the iPad does not support.

Given that most people today carry a mobile phone with them anyway, why would potential buyers choose an iPad rather than an iPhone, when they would then also have to budget for a separate phone handset as well?