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Although it's facing increasing competition in various sectors, Apple (Nasdaq: AAPL) continues to be the darling of investors. Its share price soared above US$130 by the close of market Tuesday, which was an increase of more than $8 from Friday's closing price.
That increase followed the release of a research note by Morgan Stanley analyst Kathryn Huberty stating that Apple is emerging as the clear leader in the battle over the mobile Internet.
Investor optimism aside, whether Apple can fulfill that expectation remains to be seen. Android is making strong headway in the U.S. and looks to be beating Apple to the Chinese market.
Meanwhile, wireless carriers may turn up the heat on Apple's App Store soon.
iPhone's Ringtone: Kaching!
Morgan Stanley raised Apple to "overweight" on Tuesday, saying it will win the mobile Internet war and predicting that iPhone earnings will continue to grow over the next two years.
Analyst Kathryn Huberty raised the price target on Apple stock from $105 to $180 and said iPhone sales will account for about 50 percent of the vendor's earnings, up from 30 percent in 2008.
Cutting the price of the current iPhone, she added would double demand from 2 million units to 4 million.
The Smartphone Competition
Palm last week managed to steal the smartphone spotlight when it divulged a release date and a price on the Pre, a handset that may pose a potential threat to the iPhone. The Pre comes out on June 6 -- just before Apple's Worldwide Developers Conference.
Those who've sneaked an early glimpse of the Pre generally rave about its user-friendliness, fast operating system and how easy it makes Web searches. More importantly, the Palm Pre's operating system, webOS, is entirely new.
"This is not your father's Palm device and this is not your father's Palm OS," IDC analyst Ramon Llamas told MacNewsWorld.
The next-generation iPhone has lost some of its pizzazz because of previous announcements, Llamas said. "Apple kind of tipped its hand as to what's going on with the next-generation iPhone when it talked about the next generation of mobile OS X in March," he said.
Then there's Android, which is itself no slouch. AT&T (NYSE: T) and T-Mobile will reportedly unveil a slew of Android phones in the U.S. later in the year.
Meanwhile, handset manufacturers are flocking to turn out Android phones. They include Motorola (NYSE: MMI), which will reportedly produce two models; Samsung; LG; and Sony (NYSE: SNE) Ericsson (Nasdaq: ERICY). The grapevine also has it that Japanese giants Sony and Panasonic are planning to join the scuffle.
Eating Apple's Moo Shu Pork?
Not only is Android threatening the iPhone in the U.S., but it also seems to have beaten the iPhone to market in China, if reports are true.
Taiwanese device manufacturer HTC is reported to have concluded a deal to provide China Mobile, the world's largest wireless carrier, with its Magic smartphone running a Chinese version of Android developed by HTC.
HTC has the chops -- it produced the G1 Android smartphone being sold by T-Mobile in the U.S. Company spokesperson Linda Mills declined comment, however. "I won't be able to confirm or deny the speculation," she told MacNewsWorld.
Still, if reports of the deal are true, they could be particularly galling for Apple, whose notoriously restrictive conditions may have cost it the chance to sign up China Mobile as its partner.
That's not all -- China Mobile has developed OPhone, a smartphone operating system based on Android and TD-SCDMA, China's own 3G standard. TD-SCDMA stands for time division-synchronous code division multiple access.
No Kung Pao Chicken Either
Apple is reported to be in talks with China Unicom, which is dwarfed only by China Mobile. While China Unicom has about 138 million subscribers, China Mobile has more than 477 million. That's over one and a half times the population of the United States, which was estimated at 304 million in 2008.
Apple, though, might find China Unicom to be a rather strange bedfellow. The carrier has announced plans to join the Open Handset Alliance, a group of dozens of technology and mobile companies that developed Android.
The Chinese carrier plans to develop and promote Android phones and cooperate with Google (Nasdaq: GOOG) to enable wireless search in the Android handsets that the two companies launch together.
Apple remained silent when asked about the arrangement. "We cannot comment on rumor and speculation," spokesperson Natalie Harrison told MacNewsWorld.
Attack on the App Store?
Apple's App Store, which has been a big help in driving people to buy iPhones, is also being targeted by the competition. There's no doubt it's an attention-getter -- almost every day a new iPhone app story hits the headlines, the latest being that the cover for the latest edition of The New Yorker was created with an iPhone art app.
This week, Nokia (NYSE: NOK) announced the launch of its Ovi Store, which was set up to provide targeted media for Nokia phone users who wanted to download apps. That launch hit a snag, however, with complaints that the store was down for long periods of time, pages either loaded slowly or not at all, and some apps disappeared from the store altogether.
Nokia's explanation: Unexpectedly high traffic flows disrupted service. Nokia did not respond to requests for comment by press time.
Nonetheless, the attacks on Apple's App Store will gain strength. "Carriers like Sprint (NYSE: S), Verizon and AT&T already have app stores, they just don't call them by that name," Julien Blin, principal analyst and CEO of JBB Research, told MacNewsWorld.
However, the recession will likely see carriers beginning to monetize their app stores. "They already have critical information like location and can offer direct carrier billing capabilities through their mobile app stores, which are key advantages," Blin said. "They'll probably begin promoting their existing mobile storefronts as mobile app stores."
