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Back to my 2010 predictions, this time mainly about Apple, the PC company that fared best in 2009 and is likely to fare best in 2010, too. Though I also wonder at what point we take Apple’s hint and stop thinking of them so much as a computer company?

Over the past years Apple has brought out successively better and ever more solid versions of OS X. They’ve completed a transition from PowerPC to Intel processors that could have killed a lesser company. They’ve built a dominant line of professional apps and a competitive line of productivity apps, pricing them reasonably compared to Microsoft. They re-invented the media player and the smart phone. They revolutionized the record business. And having once vilified the very idea of Apple stores, they changed their minds and showed the world how stores ought to be run. The company is absolutely at the top of its game despite a CEO who was absent for months near death. How do you top that?

In 2010 you do so by entering new markets and turning on old friends, sometimes simultaneously. That’s likely to be the case with the coming iSlate tablet, or whatever it will be called, which definitely won’t be running exclusively on AT&T. You can see that from AT&T’s sudden embrace of Android, which never would have happened if Steve Jobs hadn’t first made a preemptive move of his own for the iSlate, probably to Verizon.  The Apple/AT&T marriage is now one of convenience only.

The iSlate (or whatever) will be Steve’s idea of a new category of computing, or at least that’s the way he’ll spin it. Not an ebook reader, not a tablet computer, not a pen computer, not a handheld, not a smart phone, the iSlate will be something else and I’d say that something will depend on: a) the content deals Apple can announce, and; b) whatever Steve decides to claim for the product, whether actually true or not.

So expect lots of print deals for newspapers, magazines, and books. Expect, too, audio and video deals for the iSlate. Expect some major UI gimmick too, because that’s always at the heart of one of these advances. “It isn’t an MP3 player! It’s an AAC player with this tuning wheel thingee!! ” See what I mean?

Apple will under-promise and over-deliver for the iSlate. And if for some reason they don’t, then they’ll just declare it to be a hobby, like the AppleTV.

Apple as a content company will move into subscription music based on its recent Lala Media acquisition, but don’t think this embracing of streaming means Apple will be abandoning downloads, no sirree. Remember that while Hulu, for example, has been making a lot of news delivering streamed TV and movies, Apple has been making a lot of profit downloading both for sale and rental.

The downloading-streaming-downloading pendulum is about to turn direction, I think, with the advent of true 1080p video on the net. Years ago no network was fast enough for high fidelity streaming audio, much less streaming video, so everything was downloaded. Then networks got faster and people streamed. Then video came along (and Bit Torrent) and people downloaded again. That’s when iTunes rose to power for those of us who actually pay our bills. Then YouTube made streaming again popular. But now 1080p files are just so darned big that downloading is, again, where it’s at.

So what does that say about Apple’s vaunted rejection of Blu-Ray disks? I’ve maintained in the past that Apple refused to offer Blu-Ray as part of its agenda to take control of downloadable HD video standards. and I think I was right. But here’s news: Apple’s new line of iMacs were supposed to ship with Blu-Ray drives, but didn’t. What gives with that? Maybe it was a technical glitch, maybe a last minute pricing problem, maybe Steve didn’t get enough blood or flesh from some corporate partner (Sony). But I think it means that the fight over HD was won by Apple to the extent that they feel they can start listening again to their professional customers from the video industry who have been screaming for Blu-Ray.

So look for Blu-Ray drives to start appearing, shortly, in Apple computers along with Blu-Ray support in all of Apple’s professional applications. Look also for Apple to offer some higher level of HD download, probably with expanded device portability courtesy of Disney’s new KeyChest technology, which I am sure came from Apple.

And then there’s the iPhone. The iSlate will be a bigger iPhone, but in 2010 we’ll surely see at least two next-gen iPhones, too — a smaller form factor in the Nano tradition and a 1 GHz processor on something like the current model. Apple will remain atop the smart phone market, where Android may eventually threaten, but not yet.  As we see from the first Nexus One reviews, Google has a lot to learn.

More about Google and the Nexus One tomorrow, as well as an interesting theory about Apple and Nokia.

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Dag nabbit I had hoped to get away without having to write a predictions column this year, but no such luck. Look for that one tomorrow. Tonight, of course, there’s Google’s Nexus One smart phone to write about. Is it an iPhone killer? Hardly. And that’s not even the point.

Google’s Nexus One is a very nice smart phone as far as I can tell. I only read what you read and I haven’t yet played with one, but a couple nice folks who were on TWiT with me this week have tried it and liked it a lot, especially the screen. Yet many of the stories I’ve read today have presented this product introduction as a seminal break between Apple and Google with one trying to kill the other. Not even close.

Apple is very happy with its iPhone sales, thanks, and those are unlikely to be hurt much, if at all, by the Nexus One. Not that the Nexus One can’t be a huge success for Google. But here are the points everyone seems to be missing: 1) there is plenty of room in the mobile market for both Apple and Google, and; 2) this product introduction really marks the ultimate decline and fall of so-called “feature phones” and the rise to dominance of smart phones. Within two years there will be no more feature phones, at least not in the U.S.

The real losers today, then, are makers of feature phones and, maybe, Microsoft, which has the most vulnerable smart phone platform in Windows Phone.

The Nexus One introduction, coming on top of the iPhone, marks the true ascendence of smart phones as an alternative platform to desktops and notebooks. No, you can’t survive on a smart phone alone, the days of one computing device per person ended long ago.

But this does mark the beginning of the smart phone shakeout, when the industry matures and inevitably drops to no more than three viably competitive smart phone platforms. So just as you have Windows, Mac, and some form of ‘nix fighting it out for desktops and notebooks, so too we’ll shortly have three major mobile platforms to choose from.

iPhone and Android will be here for the long haul with the question being which of Symbian, Palm, Windows Mobile, or Blackberry will die?

What’s your guess? My guess is that Blackberry will be the third standard, Nokia will eventually leave Symbian for Android, and Microsoft will buy Palm but then screw it up, losing its position almost entirely in the mobile client space where smart phones will soon dominate, selling up to a billion units per year.

Hey this did turn out to be a predictions column after all!

More predictions tomorrow.

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Last time I wrote about the business and technical context into which Apple would be bringing its long-rumored tablet computer, which many of us now believe will also be some form of e-reader. That column stimulated a lot of lively comments, thanks, but now I have to put up or shut up, giving my thoughts on both the still-secret Apple device and the possible content strategy behind it.

I think we’re all fairly sure at this point that Apple will shortly release such a device and that it will be nominally based on the iPhone or iPod Touch.  This is key because of the App Store and iPod ecosystems it will leverage.  Anything that runs on an iPod Touch will run on the tablet.

Since the tablet is also an e-reader, it has to have both a larger screen and greater battery life so users have a hope of making it all the way to the train platform scene in Anna Karenina.  Readers are probably correct, then, that the new Apple will have an e-ink display or equivalent. Current players in this very limited space are e-ink, SiPix, and Kent Displays, so Apple is likely to go with one of those.

But an e-ink display and the iPod Touch (or iPhone) app and content libraries are not enough.  Apple has to have unique content for the new device, which is why Cupertino has been talking to traditional publishers and those publishers have been blabbing to each other.

Publishers want to make money.  They want to be paid for their content.  They may also want to show ads.  Most importantly, though, they want a change of platform such that they can reassert control over their intellectual property, which has been for the most part subverted by the Web.  The easiest way to do this is through a new file format combined with a new category of content.  A tablet edition of the New York Times, for example, would ideally not be easily readable on other devices without paying something to the Times.  This is not to say it would be impossible to read the Tablet Times on your Windows PC, but not without first buying the content file.  And while viewing on a Windows PC is probably inevitable, don’t expect to read that same file on a Zune, ever.

One interesting way around this problem of getting paid while still reaching for a true mass audience would be to make certain content features usable only with the e-reader.  So the basic story might be readable on most any notebook or mobile phone, but to see the accompanying video would require the paid version.  This is just a thought, not a prediction.

The best user experience with this new content type would be using the iTablet, which would be supremely portable, silent, power-efficient and easy to read.  Bigger and with longer battery life than an iPhone or an iPod Touch, the tablet would be ideal for reading on a train or plane, in the car, during lunch — anywhere you’d read a magazine or book. Heck, hasn’t that always supposed to have been the idea behind an e-reader?

The content has to be somehow better than what can be read on a Kindle.  That’s made easy almost out-of-the-box given the iPod Touch software base.  Here’s the potential for content that actually does something.  I think that’s key.  For this device to succeed it has to have a large volume of content that simply does more than you’d generally expect on other platforms.  Otherwise why buy the reader?

As I wrote last time I have no inside knowledge of Apple’s plans.  But I know Apple as well as anyone and I do have one bit of insight.  Two years ago, while shooting interviews at e-ink in Cambridge Massachusetts, we saw what was probably the first demonstration of an e-ink display that was in color and supported full motion video.  I am absolutely convinced that display or its equivalent will be at the heart of the new Apple tablet.

Kindle is black and white.  Apple is color.  Kindle is static.  Apple offers animation and video, along with an LED backlight to make colors pop if the lighting is right.  Kindle is filled with books, magazines, and newspapers.  Apple is filled with books, too, but some of them will be like books in Harry Potter, with animation built into the pages.  Apple magazines and newspapers will include animation and video for a new kind of composite publishing format that will be Apple-protected and mainly for sale even if some ads are included. And the Apple device will play music, videos and movies, too.  Why not?

It won’t be cheap, not at first, because it doesn’t have to be.  I’d look for an introductory price in the $499-699 range for the first million or so units after which the price will start to fall.  Content will definitely be available by WiFi, but there’s also the possibility of a Kindle-like cellular connection that could be used by Apple to subvert AT&T’s network exclusivity on the iPhone.  This new device will be, after all, a new device, and not necessarily subject to the AT&T exclusive.  If there are cellular and non-cellular versions, then the iPhone/Touch analogy is complete.

Questions that remain concern how Apple will defend its new franchise and how the company will be paid for content. Many readers have yearned for a micropayment scheme as the cure for the common newspaper. As a guy who lives by writing I yearn for that, too, but I don’t see it coming, at least not in a form dramatically different from what Apple already has working with iTunes.  Sure it is attractive to make (or spend) a penny here and a penny there, but iTunes has already taken most of the friction out of purchasing content, both through one-click buying and (this is vital yet ignored by most pundits) the role of iTunes gift cards to bring online purchasing to tweens.  iTunes is an enormous money machine that will be extended to cover as many new types of content as Apple can think of.

How to protect the franchise is a little more complex.  Apple will look for exclusive deals wherever it can – exclusives with publishers as well as technology suppliers.  The publisher deals are easy since this new content won’t generally play on other mobile devices, though I’m sure you’ll be able to read it all on any iPhone or iPod Touch so Apple can claim an ab initio installed base in the tens of millions of units. I’d expect Apple also to try for a display exclusive of some sort, possibly even acquiring e-ink, which is in the process right now of being acquired by a Taiwanese LCD vendor called PVI.

This e-ink/PVI deal is especially interesting because it was announced back in June as an all-cash deal for $215 million then revised earlier this month throwing-in 120 million preferred PVI shares for the former e-ink investors.  This is a huge about-face that instantly doubles the price of the purchase while also giving the former e-ink owners a share in any upside for the business — an upside they obviously expect to enjoy or they wouldn’t have held out for it.

E-ink had, over the years, raised $150 million, so while the investors were being made whole by the original $215 million sale price, their upside wasn’t much.  But then the electronic ink business, for all its apparent potential, hasn’t really been that good despite e-ink’s use in both the Sony and Amazon Kindle readers. Four months ago the e-ink investors were thrilled to just get their money back.  Then something changed.  They just demanded (and got) twice as much money in the form of preferred shares giving them a significant piece of any upside explosion — an explosion they clearly didn’t expect when the original cash deal was negotiated.

The something that happened I believe was Apple’s entry into this market segment. That alone may have been enough.  I’m guessing Apple, like it did with Samsung and Flash RAM, made a huge commitment for most — maybe all — of e-ink’s color display production for years to come.  Or maybe PVI is simply flipping e-ink to Apple.  Only time will tell, but I know in my bones that there is something going on here.

Chances are that Apple’s tablet won’t revolutionize publishing, but for Cupertino it will accomplish more than enough to be a success if it extends the iPhone and iTunes user bases, crushes the AT&T exclusive, and pushes Amazon and Sony to second and third places in the e-reader category. For Steve Jobs the goal is always to change the world, but if that can’t be done then making money and beating the crap out of competitors is almost as good.

Bentonville stands in the northwest corner of Arkansas only a few miles from Missouri, Kansas and Oklahoma. It is a little city in the Ozarks with a fine town square where once there stood a Ben Franklin variety store owned by Sam Walton. Today, that store on the square is a museum, and Bentonville is the headquarters of Wal-Mart, not just the biggest retailer in the world, the biggest COMPANY in the world. There is nothing fancy about Wal-Mart, and that certainly applies to its corporate headquarters, a nondescript brick building where every day suppliers from around the world come to peddle their wares. The place where would-be suppliers meet Wal-Mart buyers looks like an old Quonset hut from World War II. The hut is filled with folding chairs and metal tables where the meetings are held. This, with no exceptions, is how business is done, and that Quonset hut explains exactly why Wal-Mart is bigger than all its competitors and strikes fear in smaller retailers the world over.

Wal-Mart is a pure example of keeping transaction costs low as exemplified by the modest global HQ and the Quonset hut meetings with suppliers. But it’s what goes on during those supplier meetings that is even more important, because Wal-Mart buyers are notorious for demanding product design and packaging changes from suppliers — changes that are usually more intended to lower costs than to increase customer appeal. As long as Wal-Mart buys more from a supplier than any of its competitors does, Wal-Mart will get the best prices, which can be converted into the most sales, the most profits or the highest market share, depending on what Wal-Mart values at that time. So if you can keep transaction costs down, bigger is better, way better. Since the playing field is never truly level for this reason, Wal-Mart will always have an advantage, and small town retailers will always be threatened. There is nothing illegal about this, either. There is nothing illegal about being big.

Which brings us to this week’s surprise announcement that Steve Jobs would not be giving the Apple keynote at MacWorld next month.  And in fact Apple won’t be participating in future MacWorld shows AT ALL.  Isn’t this a trend?  As I recall Apple pulled out of European MacWorld events years ago.  They see the future of product introductions generally done online and at Apple HQ and they don’t care at all about third-party vendors.

But given that Apple is contractually obligated to participate in one final January show, why isn’t Steve Jobs doing the honors?  It isn’t because of his health.  I blame Wal-Mart.

A reader from Arizona just reported to be seeing an iPhone sales display being unpacked in the back room at his local Wal-Mart.   Wal-Mart is going to start selling iPhones after Christmas.

Now this is just a guess, but if Wal-Mart is about to start selling iPhones, then given the nature of their vendor relations typified by that quonset hut, they’ll demand Steve Jobs come to them – perhaps even to Bentonville – for whatever iPhone launch event Wal-Mart plans.

Steve paces himself.  There is no way he’ll do two product intros in one month.  And I doubt Wal-Mart would allow him to in any case.

We’ll just have to see what happens.