Will Apple take over the developer market?

What follows is 100% speculation based on assumptions built from rumors built from unkept promises. Take it for what you think it’s worth, but something tells me there are realitites in some this. Here goes:

We all know that the iPhone has shaken up the smartphone market. A lot. And we all know that to a degree no one has caught up yet. The Palm Pre looks like a possible contender, but whether it’s the Android G1 or some other gadget, no one has hit the sweet spot–even after two, almost three years. That says a lot about how long it takes to catch up–or at least how out of kilter things got in the phone space to begin with. Take your pick.

I think we might, just might, be on the cusp of another shakeup. This time in the small netbook market. And once again, I think it might be Apple that does the shaking.

This fall, rumors suggest that Apple is set to release a device larger than an iPod Touch and smaller than a MacBook–at least according to the Wall Street Journal. Some rumors have placed the device’s display in the 10″ range. Is this the Apple Tablet that people have been rumors of for years? Is it a netbook? Is it an iPod Touch with a larger screen? Who knows.

One thing is for sure: If Apple does come out with a new product in this part of its product line, it could be transformative–both for users and developers. The biggest hit may come to the netbook space. This is where the most pent up demand has been forming.

For months Apple enthusiasts have been clamouring for an Apple netbook. So far, no response outside of Steve Jobs saying they couldn’t find a way to produce a quality product for $500. He went on to clarify that they were working on interesting projects, but didn’t elaborate. Any hardware company probably could say the same thing.

And the enthusiasm for a small notebook is not just on the Apple part of the store. People have been buying and returning netbooks in large numbers ever since ASUS shook up the market with its low-cost ASUS Eee PC (which was a response to the low-cost OLPC).

Point is people are ready, and up to this point no one has found the right combination of hardware and software that creates the market that I think is eager to be filled. People just don’t know what it is, though they’ll know it when they see it.

The Apple iPhone was like this. The Amazon Kindle is another transformative product. My impression is all eyes are on Apple to deliver on yet another possible device leader.

Now not everyone is waiting for Apple to fill the small device market–something that’s highly connected, highly mobile, and offers a price point that encourages spontaneous purchases. Michael Arrington at TechCrunch is leading an effort to build a web reading device like this called the CrunchPad. This past week the team released photos of their latest prototype. It looks quite encouraging.

But there is a difference here between the CrunchPad market and one that Apple might ignite and that’s in the developer space. Apple can do much better here. If Apple builds up from its iPhone and iPod Touch efforts and leverages the App Store and pricing model, there’s a very good chance that an Apple made small mobile device could change the way we think of netbooks. I think every developer should be paying close attention. We don’t know if Apple will deliver on the rumors, but if it does, watch out. All signs are that the market is ready.

Yes, there are a few Tablets, MIDs, etc in this possible market segment, but all are too big if you ask me. Look for something in the one pound or less category. Assuming that Apple is not restricted by Intel’s processor family, they have some very good options to lead the market. It’s going to take awhile for Intel and its partners to catch up in the very thin device category. Moorestown might do it, but I’m not so sure. I think we would have seen something more interesting at CES 2009 if it was a great competitor.

Now some might argue that whatever Apple releases others will catch up so there’s no need to worry about getting left behind. Uhm. Look again at what’s gone on with the iPhone: There are only now some competitors closing in. And in the MID category, there’s no one even close. Apple essentially has a lead there for the next year I’m guessing. Again, it’ll depend on how Intel delivers with its next generation low-power Atom processors.

Point is that the OEMs lag–probably because they get caught up in their large PC sales, large volume thinking. They see the potential, but it’s too much work to make a transition at this time.

So here’s my thinking: If it looks like Apple builds up from the iPhone and iPod Touch, watch out. If they thin down from their classic notebooks, then I’m not so keen on what they might ultimately sell. One grows with the Internet connectivity trend and mobile devices, the latter offers a new market segment for their existing customer base. It’s the former that could be such a big deal from what I see.

If app and content prices can be kept down, expect a shake up. A signicant one. In this case, there’s not a single developer I know–or anyone that might contemplate starting development–that shouldn’t be ready to target this possible Apple opportunity. Not a single one.

Now, many times I let my enthusiasm get ahead of me, and this might be one such case. The technology might not be there to make a Kindle thin, netbook like device that offers the connectivity of an iPod Touch, yet the reading comfort of a small notebook. Thin. Light. Easy to use. Easy to carry. Comfortable to use for extended periods of time. Easy to use at an instant. Inexpensive. That’s the sweet spot.

Fortunately, if Apple leverages the iPhone developer space as I think they could, there’s time to watch things unfold and then adjust. Overnight Apple can’t have their developers release new products that fit a different screen sized device on a product with different features.

And it is possible that another player will step in and shake up the market as much as I think Apple can here, but I’m not so sure. Plastic Logic is looking to do some interesting things in eReaders, but then again they use the eInk technology widely adopted by the eReader market that also makes some significant tradeoffs that are going to hold this product segment back from general adoption.

No matter, products that leverage ultra thin displays on plastic are the ones to watch. They will be the transformative offerings. Might an Apple product this fall include such a technology? Probably not yet, but whatever it is, like the first iPods, it possibly could set up the baseline.

Let me offer myself out possible out here: If Apple doesn’t release much of anything exciting this fall, then I’d say continue to watch the eReader space evolve. These devices are in the right weight class. Devices in the under 1lb category are the ones to watch. As eReaders add more interactivity they very well may encroach the MID-slash-netbook market. Exciting times ahead.