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iPad Is Weak, But Apple Is Strong

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Apple may be headed for hangover mode, but the company is still dominant in the long-term.

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Yes! The mythical Apple (AAPL) Tablet computer is out of the closet and it has a name: iPad

I'll start with a Tweet-size review: looks amazing and it's cheaper than I expected, but missing a camera, USB port, and an SD Card reader.

Now I hate to play party pooper, but this isn't the product that takes Apple to the next level. As cool as the iPad looks, and I'm willing to bet it's even more impressive hands-on, it's still a product in search of a purpose.

As Steve Jobs noted, the iPad is clearly targeted at filling a middle ground between smartphones and notebook PCs. But there's a problem: unlike smartphones and laptops, a tablet computer doesn't fundamentally change how people do anything. Smartphones gave us mobile email and Web access, and the ability to take pictures without a traditional camera. Laptops let us do all of our computing tasks on the go.

The techies that are most interested in a tablet already own both a smartphone and a notebook PC. And since the iPad doesn't let people do anything that's really new, there's no reason to carry one around when all the essentials (email, Web surfing, media playing) are covered by stuff we already own.

Reading books and awkwardly playing the same mediocre games on a bigger screen? Sorry. That's not enough for this bear.

Apple still wins long-term because it makes great stuff, but the stock is ready to go into hangover mode for the near-term. With the State of the Union Address last night, I can't help but compare the iPad to President Barack Obama -- a fellow victim of out-of-control hype.

On the other hand, Apple will reap some benefits from the introduction of the iPad. First and foremost, the 12 people who cared about Microsoft (MSFT) Windows 7-powered tablet PCs are now waiting to check out the iPad. Secondly, the lowest-end $499 iPad is a lot sexier than the Amazon (AMZN) Kindle DX which sells for about the same price. So Steve Jobs's fingers are now in the e-book honeypot -- not the worst place in the world to be.

But perhaps most importantly, the circus leading up to the iPad introduction shows that Apple still owns the media -- myself included. Whether you hate Apple or not, you're still paying attention.
No positions in stocks mentioned.
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