Apple Gearing Up for a Newton Take 2?

With the iPhone and the revamped iPod line now out of the starting gates, rumors have emerged that Apple (Nasdaq: AAPL) is working on a new personal digital assistant reminiscent of the early Newton.

A small team of Apple engineers have been working on a reinvented version of the ill-fated Newton for 18 months, this time incorporating the company's revolutionary multitouch technology, according to AppleInsider. Those engineers were reportedly pulled off the project to help complete the iPhone, but the PDA effort is now moving ahead full-bore.

The new device -- due in the first half of next year -- runs an embedded version of Apple's Mac OS X Leopard operating system, the report said. It is an ultra-thin slate device much like the iPhone but about 1.5 times the size and with a 720-by-480 high-resolution display that accounts for most of the unit's surface. The PDA may also employ multitouch concepts like drag-and-drop and copy-and-paste.

Apple officials could not be reached for comment.

Almost PDAs

Apple's Newton MessagePad jump-started the PDA market in the 1990s before meeting an early demise at the end of the decade. The original devices were based on the ARM 610 RISC processor and featured handwriting recognition software. Since then, the company has been quiet on the PDA front, with the exception of a passing comment from Steve Jobs at the Wall Street Journal's 2004 D: All Things Digital conference in which he referred to a second PDA attempt that never got shipped.

Yet several of Apple's recent products are similar to PDAs themselves, Rob Enderle, president and principal analyst with Enderle Group, told MacNewsWorld.

"If you think about it, the iPod touch is pretty close to a PDA, and the iPhone is really like a PDA phone," Enderle explained. "Basically, a PDA would be the iPhone without the phone part -- something in between the iPod touch and the iPhone."

iPhone Frustration

Such a device wouldn't be hard for Apple to create, since it already has the needed software, Enderle said. Indeed, "I thought that was what they would do with the iPod touch, but they removed more than just the phone part," he said. "The question is, why didn't they do it with the touch -- it would have been a matter of just adding a few features from the iPhone."

Apple must now be rethinking its decision and realizing that such a device might be more attractive to more people, Enderle said. "It's likely, particularly now that the iPhone is really running into trouble," he said.

Recent evidence is starting to indicate that software hacks to decouple the iPhone from its AT&T (NYSE: T) cellular service may destroy the device, Enderle noted. "Apple says it's not doing it on purpose, but everyone thinks they are -- at the very least, it's not taking trouble to keep it from happening," he said.

"People are starting to get frustrated with the product, so it would make sense for Apple to do something like this and maybe get away from the AT&T thing altogether," he concluded.

A Matter of Course

"Of course Apple is working on a PDA -- it's called the iPhone," quipped Ricky Spero, contributing editor at The MacObserver.

"That said, it's impossible that Apple isn't looking at ways to bring multitouch to the Mac," Spero told MacNewsWorld. "The interesting question for Apple watchers is how it will happen."

Apple is unlikely to start shipping laptops with multitouch monitors, Spero added. "Will Apple introduce multitouch peripherals to supplement existing Macs?" he asked. "Or will they design totally new multitouch computers so different in form and interface that they can no longer be called Macs?"

Market Prospects

Only time will tell the answers to such questions. In the meantime, the market prospects for a new PDA device from Apple look good, Doug Bell, research analyst with IDC, told MacNewsWorld.

"As far as growth on a wide scale, there are tons of opportunities here in both the slate and the convertible tablet areas," Bell said. "There's more volume in the convertible area for growth, but either way, we're talking anywhere from 50 to high-60 percent growth year over year between this year and next," Bell said.

Slate and convertible tablets will continue to enjoy growth rates that are high relative to those of the PC market as a whole, surpassing 40 percent each year through 2010, Bell added.

Promising Demand

"Market demand could absolutely be there on both the consumer and the commercial sides," Bell added. "We're now seeing more use in the commercial area, but vendors are noticing a trend in consumer demand as well."

A new PDA from Apple would be unlikely to cannibalize its existing offerings, as long as it offers a different feature set, Bell said.

Looking forward, tablets will max out at about 4 percent of the PC market by 2010 or 2011, Bell said.