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Jun 9, 2008

Reflections on Apple WWDC Announcements

Apple announced 3G iPhone and the iPhone application department of the iTunes online store; and demonstrated applications for gaming, GPS, enterprises, and vertical markets like health. Wall Street reacted negatively.

  • iPod and the Mac represents the bulk of Apple revenues. Nothing new announced.
  • Release delayed to Jul 11th - while US stores are sold out on iPhone.
  • Doubts about Apple's ability to penetrate enterprises.
What Wall Street ignores:
  • Smart phone is a larger potential market than laptops. Apple leads the mindshare among smart phone suppliers - stealing from Nokia, Motorola, RIM, and Palm.
  • It's a larger segment than iPod with higher residuals.
  • Apple's distribution via global telcos extends the global brand - without dependence on Apple store growth.
  • Apple may gain a substantial portion of the game player market among gen-Y. Sony and Nintendo should beware.
  • Apple may also gain as a GPS device maker.
  • The surprise may be Apple gains among enterprises. 
  • Success with iPhone provides Apple with a three-prong product portfolio. Vertical integration from iTunes, Apple stores returns profitable residuals. This stability reduces investment risk.
Bottomline, wall street again reacts to the short term view.

1 comment:

  1. 3G iPhone: Apple Business Model Changes; No Subscription Fees From Carriers For Next-Gen iPhones

    from paidContent.org by Joseph Weisenthal

    Amidst all the hoopla of today's iPhone launch, Apple (NSDQ: AAPL) has made an interesting filing with the SEC, which explains that business model behind the iPhone is changing. Here's the key paragraph, which indicates that the new 3G iPhone is no longer a subscription business for the company: "Apple has signed multi-year agreements with carriers authorizing them to distribute and provide network services for iPhones in over 70 countries. These agreements are generally not exclusive with a specific carrier, except in the United States, United Kingdom, France, Germany, Spain, Ireland, and certain other countries. Under the vast majority of these agreements, Apple will not receive follow-on revenue generating payments from carriers for the new iPhone 3G beyond the purchase of the device by carriers or a commission on sales of the device by Apple. Apple will continue to receive payments from cellular network providers related to first-generation iPhones as long as they remain active on authorized networks."

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