Stock Research – Apple Computer Rocks World With New Phone

It is extremely rare in the business world to find a corporation that starts a revolution, and then the very same company leads another revolution. Steve Jobs who runs Apple Computer successfully stood the computer world on its high legs, and then shook its foundation when he created with his associates the very first personal computer. Yes, there were others before him, but they were nothing in comparison to the Apple. The operating system that Apple uses is still acknowledged to be vastly superior to anything that giant Microsoft has ever come out with.

Jobs did make one mistake however, and this mistake cost him his only opportunity to become the richest man in the world. Several decades ago, Apple had the opportunity to license the operating system to other personal computer manufacturers. Jobs made the mistake of believing that it was ABOUT THE HARDWARE. In reality, it was about the software.

Apple never licensed the software, and Microsoft did, which allowed the inferior Microsoft system to become the industry standard, which it still remains today. Gates became the richest man in the world, while Jobs had to settle for selling Apple personal computers with the software embedded into the hardware.

As an aside, the best investment Jobs ever made was probably the 10 million he put up to buy half of Pixar films. Disney passed on that $10 million deal, instead choosing to pay $4 billion plus for the same $10 million dollar investment that Jobs made, only it was several years later.

Jobs’ creation of the iPod revolutionized the music industry, which has experienced no growth for years until Apple came along and sold a 100,000,000 iPods that required music and its associated royalty fees. The music industry should give an award ceremony just for Apple.

Now Steve Jobs and Apple Computer, soon to become Apple Inc. are at it again. This time Jobs and company have created a cell phone device that threatens to create hegemony over the entire cell phone industry. The problem today with sophisticated cell phones is that they are too difficult to operate. The buttons on the blackberry require that you use a stylus to trigger them. Another cell phone, the Treo is not that much better in terms of operational design features.

What Jobs has done for this industry is take it to the next level, and what a level it is. It really shouldn’t be called an iPhone. The phone features of this device are probably the least interesting. I have spoken to two technology mavens that have access to this new device, and their features startled both. This is the equivalent of going from silent films to the talking movie era.

Imagine yourself struggling with the Blackberry small buttons or the Sony Treo? Now along comes the iPhone. There are practically no buttons on the device. It’s got a very large screen, which dominates the front of the device, and it is a touch screen. You operate it by finger alone. It scrolls the various listing almost like a roulette wheel. It slows down, and zeros in on the item you want. As it is slowing down, you have the opportunity to re-engage the scroller. It’s almost as if it has artificial intelligence built into it – that’s how good the user interface is.

This flicking or scrolling feature also applies to iTunes software and your photo collection, address book, videos, and podcasts. With a 3.5 inch screen, movies are far superior to previous Apple products, and there’s real time e-mail delivery similar to a corporate Blackberry but without the extra fees involved.

Now without the small keys that I have on my Blackberry, you have to touch the screen of the Apple to send messages. It is clearly not as precise as the tactile response of a Blackberry, but the software wildly overcomes that deficit. The Apple software has spelling correction software built into it, so if you hit the wrong key the device corrects it.

Browsing the web with this device is a mindblower due to what is called the “Pinch feature”. You can take a Web page that you are looking at, and with your thumb and forefinger pinch the picture wider or narrower, higher or lower. The real beauty here is the simplicity of the entire device.

Most products that are designed by engineers are created with an added level of complexity built into it. It’s like a writer that wants to use words that very few people understand. Why do people design like this? It’s because they want to impress themselves, and others with their brainpower. What is more interesting is how such designs survive to become marketed products.

The American car market self-destructed when for 20 years, the companies were run by financial / accounting types, not people who LOVED CARS. Apple has clearly developed a corporate culture that puts functional design first, and engineers, and software geeks second. From the PC to the iPod, and now the iPhone, we have a history of fabulous, sterling products coming out of this American design factory.

These guys even put the speaker on the bottom front edge of the product . I have a Motorola Razor that when I put down in the car, I can’t hear it when it rings, the speaker is on the back. You will notice that Motorola stock took a hit to the downside this week with the unveiling of the iPhone. Apple’s new product is not cheap. It will sell between $500 and $600 per phone depending upon storage capability. Cingular will be the only carrier at the moment.

So the real question is at this price point how much of the market can the iPhone capture. My firm’s answer is plenty. Apple is looking to ship 10 million phones by the end of 2008. This equals about 1 percent of annual worldwide cell phone sales. We think that the sales goal is easily achievable.

You can buy a Blackberry, Treo, or Razor cell phone for $200 to $300. You still need an iPod if you are into music. The iPod sells for a couple of hundred dollars by itself. At some point Cingular, or other cell phone companies will be kicking in part of the cost in order to get subscribers. That amount is usually up to $100 per phone. We see people standing on line to get this product. Will you be one of them, I will?

People pay big bucks for snob appeal and status, and this product qualifies for the ultimate status definition. Status is buying things you don’t need, with money you don’t have, to impress people you don’t know. Stay tune for more.

Goodbye and Good Luck

Richard Stoyeck