By Arik Hesseldahl
http://www.businessweek.com/technology/content/jan2010/tc20100122_583507.htm

The wait is almost over. On Jan. 27, Apple (AAPL) is expected to introduce a tablet device that Mac fans have awaited for years. Rumors that Apple may release a tablet date back at least a decade, to 2000, when reports surfaced that Apple was working on a handwriting recognition technology called Inkwell.

Starry-eyed Mac fans have imagined tablets in various permutations ever since. The debut of the iPhone and the iPod Touch fueled the speculation further. The iPod Touch in particular proved that a light Internet device with a touchscreen could be successful. Make the screen a bit bigger, and you've got a whole new class of product. Apple's new device is widely expected to resemble the iPhone and iPod Touch far more than a full-fledged Macintosh running Mac OS X.

Thing is, if you really wanted an Apple tablet, you could have gotten one—at least a version of one—for years. It's called the Modbook, and it's available from Mac dealers that partner with a small company based in El Segundo, Calif. Called Axiotron, the company was founded by a former Apple Europe executive named Andreas Haas.

Axiotron aims to meet the demands of a particular niche: people who work in the creative arts, use a Mac, and want to draw and sketch with a digital pen directly on the screen. Axiotron (AXO:CN), which trades on Toronto's TSX Venture Exchange, reported about $1.4 million in revenue for the first three quarters of its fiscal year and is expected to finish the year with about $2 million in sales. The company won't say exactly how many Modbooks have been sold since they were introduced in 2007, but some back-of-the-envelope math suggests there are fewer than 5,000 Modbook owners, and that's being optimistic.

TOOL OF ARTISTS AND ANIMATORS

Still, the Modbook does have some influential users. The comic book artist Kody Chamberlain uses one, as do some of the animators who work on TV shows like South Park and The Simpsons. Shannon Tindle, who in 2006 won an Emmy for Cartoon Network's Foster's Home for Imaginary Friends, is also an owner.

The Modbook is essentially a MacBook that's been taken apart and reassembled into a tablet. Haas compares Axiotron with AMG, the company that since 1967 has sold tricked-out Mercedes cars. (Once independent, AMG has been a part of Daimler (DAI) since 1990.) "The idea was not to mess with any of Apple's copyrights or anything like that, but to put the Mac through a chop shop in order to make it into what our customers need it to be," Haas says.

Apple seems unconcerned about Axiotron, and indeed may quietly welcome its ability to meet the needs of a tiny, yet loyal niche market for the Mac.

Apple spokesman Steve Dowling had no comment about the company.

Haas says he isn't worried about the tablet device Apple is close to launching. In fact he's looking forward to buying one himself. "What we think Apple is going to do will not encroach on what we do," he says.

The Modbook traces its roots to 1998 when Haas was tapped to wind down Apple's business selling Newton handheld devices in Europe. "I was literally the one who switched off the lights and closed the doors," he says. He loved the product, though it was much maligned and famously made a punch line in Doonesbury cartoons for its less-than-accurate, sometimes funny handwriting-recognition technology.

"GRAVEDIGGER" GIVES LIFE TO THE MODBOOK

Later came an assignment to wind down Apple's European printer business, and then other business units on the chopping block. "I ended up with a reputation for managing products right before they were killed," he says.

German reporters covering Apple nicknamed him Totengräber, or "gravedigger." "They'd see me named as manager for this or that product, and then they'd tilt their heads and ask me, 'How long?' "

He left Apple in 2001 and co-founded a software startup called Our World Live that sought to create products for the media and entertainment industry. It ran out of funding in 2004.

When tablet PCs running Microsoft's (MSFT) Windows made their debut, Haas bought one. On it he installed Adobe (ADBE) Photoshop and Illustrator, hoping for a machine that would be something of a digital canvas. It didn't work out. "It sucked," he says. "I dug a little deeper and realized there was little chance that Microsoft would ever create a tablet that's useful for creative professionals."

So he decided to make one himself. He founded Axiotron in 2005. The idea was simple: Why not modify an existing MacBook and change it into a tablet? Axiotron sells a conversion kit that independent Mac dealers such as Other World Computing in Woodstock, Ill., or Tekserve in New York can use to refashion a MacBook into the digital canvas that Haas imagined. They're sold in nine countries. Supply your own MacBook, and you'll pay about $700. Buy one that's already been converted, and it will cost about $1,650.

NOT FOR THE CONSUMER MARKET

The Modbook is so specialized and its appeal so narrow there's little chance the consumer-oriented, media-centric tablet due in coming days will represent much of a threat at all. Where the Modbook is intended for creating art, the iSlate (or whatever it's ultimately called) will largely be for the relatively broad activity of consuming it. Haas is hoping that the new device might make tablet computing more popular, and thus sell more Modbooks.

Haas knows nothing specific about the new device that's coming. Two years ago, Axiotron transferred to Apple a trademarked name, "MacTablet." Haas is reluctant to say much about the episode for legal reasons. But he's happy to speculate on the device he thinks is coming from Apple.

"I think it's going to be a device that's like the iPhone and iPod Touch, but I think it's going to have a larger screen," he says. Only recently has Apple taken to describing the iPod Touch as a "pocket computer," he says. "That is a niche I expect Apple to expand on with this new device."