Next Wednesday's new product announcement is Apple's ( AAPL - Get Report) worst kept secret. At this point, we all know that Apple will announce its new tablet computer. We know the Moscone Center has been rented. We know it's to be called iSlate. We know the media have been invited. Apple knows how to leak information in just such a way to create a feeding frenzy among tech reporters and gizmo enthusiasts. While many tech blogs are focusing on the possible specs for the new device, the majority of mainstream analysts and investors following Apple -- while enthusiastic about the new product - are taking a more measured approach. Exclusive: Apple Tablet Headed to Verizon > What's driven as much if not more excitement in the price of Apple's stock over the past month has been potential holiday upside surprises that will be announced in Monday's earnings, rather than Wednesday's iSlate announcement. This is an oversight. Let's step back and look at Apple and how much it's grown in the last three years. Top-line revenue is up 52% to $36.5 billion. Operating income is up 77% to $7.7 billion. Over that time period, the iPod has hit market saturation. iMac sales continue to grow, even amidst the economic slowdown. iPhone has also taken market share in the handset market at a blistering pace from zero units three years ago. Many of us have become immune to yet another new product announcement from Apple. They always have something new, it seems, to announce.
However, looking back, the company has really had only two major product announcements in the last 10 years: iPod and iPhone. Other announcements have only been feature updates to these products or the iMacs. Remember last year's iPhone 3GS announcement? More video recording time and voice command - yippee! When the iPod came out in October 2001 - weeks after 9/11 - there was little media coverage. At the time, the device had a 5 GB hard drive and cost $400. Today, you can buy a used 1 GB iPod Shuffle on eBay ( RIMM) for less than $40. If you can believe it, Apple's stock was trading at $9.33 when the iPod came out. There was no boost to the stock as a result of this game-changing device, because nobody knew yet that it was a game-changing device. Apple's stock price did tick up in the months after the product announcement - to $12 by the beginning of 2002 - but this was due to the general rise in the Nasdaq, not the iPod. In fact, Apple's stock began to sink as 2002 progressed (again trading with the market) and eventually bottomed out to a 10-year low of $6.56 in April 2003. By November 2005, the first marketing research report was published claiming that iPod was losing its "cool factor" because it had grown so much in popularity. Pity the uncool Apple shareholders. The stock had increased only 10 times in 2.5 years to $69.34 by that time.
In 2005, Apple was no longer a quirky once-great company, which it had been when iPod came out. The success of the iPod had transformed the entire image of the company to visionary, especially its leader Steve Jobs. Apple's done a masterful job of keeping this mantle of futuristic innovator since then. When the iPhone was launched in January 2007, the media was hungry to know what was next. However, the media and consumers didn't know how much they'd want iPhone until they saw it. On the day of the product launch, Apple's stock jumped 7%, while the shares of Research in Motion ( RIMM) and Palm ( PALM) dropped 6% respectively. People knew this product was going to be a hit and it has been. Today, Apple's stock is higher than it was in the fall of 2007 - seemingly expensive and "priced for perfection." Everyone knows that the iPod line is exhausted and close to being put out to pasture. The global economic environment isn't conducive for relatively expensive products when cheaper options exist in the market. Against this backdrop, we have iSlate's announcement next week. The media are curious but a tablet doesn't seem to be a new product when compared to the iPhone. We've seen Microsoft ( MSFT - Get Report) bumble around with tablet PCs for years. Just a couple of weeks ago, at the big Consumer Electronics Show, Microsoft announced yet another new tablet - this time in conjunction with Hewlett-Packard ( HPQ - Get Report). Companies that follow the cliche of trying to give the customer what they want don't realize -- as Apple does -- that customers sometimes don't know what they want until they see it. Until then, they can only imagine what a new product might be based on what they associate with a description of it.
For Apple's tablet, we all collectively imagine a better version of a Microsoft tablet. But a better version of something undesired is not very desirable. I suspect iSlate will be something completely new, which will cause us to see tablets in an entirely new way, a way which - only after we see it - will seem perfectly obvious. I expect it will be a device we suddenly realize that we must have, in addition to our iPhones and our iMacs (or PCs). It will allow us to watch media on the go in a much better way than on an iPod. It will allow us to read books, blogs, and news when we're mobile - in a much richer way (at least for the next 18 months) than Amazon's ( AMZN - Get Report) Kindle. It will allow us to get work done. And, it will probably let us do at least one more thing we never imagined possible with a tablet. While the stock will not jump 6% next Wednesday, I suspect there will be an immediate boost to Apple's stock price from what investors see as the potential for iSlate - certainly much quicker than iPod. When you are a $185 billion company, your investors want to see an exciting new product selling into a huge market. World: Meet iSlate. Kindle on steroids.