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Buoyed by a bullish report on smartphones from RBC Capital Markets, Apple (Nasdaq: AAPL) share prices shot up by more than US$4 on Tuesday. Share prices of Research In Motion (Nasdaq: RIMM) (RIM) and Palm (Nasdaq: PALM) also rose.
If RBC is right, we're in for a wild, high ride. If it's not -- hey, the iPhone is about to go into China, the next iPod touch will probably have new features, and perhaps an iTablet is on the way.
Still, not everything is well in Cupertino -- Apple is still trying to appease developers angry with its inconsistent approach to approving apps for its App Store.
Smartphones on Steroids
Several reports quote RBC Capital Markets as seeing a new world order in communication, computing and content converging in the smartphone. The investment banker sees smartphones taking a larger share of mobile phone sales 
than previously predicted and encroaching on the markets for PCs, TVs, media players, digital cameras, gaming and navigation devices.
Indeed, the average advanced smartphone already has many of these capabilities.
Apple's installed base of more than 100 million iPod users and over 300 million iTunes users provides natural leverage for expanding market share, and the company will continue to introduce innovative products that will grow the market, RBC predicts.
The smartphone's share of the overall mobile market will grow from 10 percent in 2008 to 35 percent by 2012, it said. Apple's share of the smartphone market will grow right along with that, from 10.8 percent in 2008 to 16.3 percent in 2012, RBC believes.
Overall, Apple's mobile market share will grow from 1.1 percent in 2008 to 5.7 percent in 2012. Unit growth will be from 13.7 million in 2008 to 82.1 million in 2012.
Apple Scores in Wireless Census
RBC's optimism is borne out by results from Meraki, a cloud-based wireless network company, which conducted its first census of wireless-capable devices in North America.
The census compared activity seen by a set of 10,000 randomly selected Meraki wireless access points in North America for two 24-hour periods in June in 2008 and 2009.
It found the number of client devices accessing these points grew by 41 percent, from nearly 150,000 in 2008 to more than 211,000 in 2009. The number of Apple devices accessing these points grew by 221 percent, Meraki said. Apple devices now represent 32 percent of all devices accessing these points, compared to 14 percent in 2008, the company found.
For Want of a Nail
Apple's bid to penetrate the China market is still hanging on, according to reports. Yes, said China Unicom officials, we're talking, but no, nothing's been decided yet.
True, in terms of gross subscriber base, China Unicom is a poor second to China Mobile, the leading wireless carrier in China, with only about 140.4 million subscribers as of the end of June. It only added about 860,000 cellular subscribers that month.
However, let's see how that compares to, say, Verizon, the largest U.S. wireless carrier: Verizon had 87.8 million wireless customers at the end of the second quarter, and it added 1.1 million customers net, meaning it took into account all those who left for one reason or another.
Look at it another way -- the U.S. market is pretty saturated, and there are something like 305 million people in the country. China's market is wide open, and its population passed the 1.3 billion mark in January. In other words, it has 1 billion more people than the U.S.
Or we can look at China Mobile's customer base. That's more than 493 million. That means there's plenty of opportunity -- if only Apple and Unicom could cut a deal.
iTablet, New iPod Touch on the Way?
Expectations are running high that Apple will unveil a tablet computing device soon. However, that device could be less like a flat Macbook and more like an iPod touch with a much larger screen.
Meanwhile, rumors about the next model of iPod touch suggest it will have a camera. Cupertino could unveil the new touch in September.
The touch is what Microsoft (Nasdaq: MSFT) has in its sights with its recent launch of the Zune HD, but that's not likely to have much of an effect. "It has the size of the iPod nano but a video performance that exceeds the touch, and [it] focuses on those people who want music and video," Rob Enderle, principal analyst at the Enderle Group, told MacNewsWorld.
"This is the best alternative I've seen to the iPod, but iPod owns this space," he said.
The App Store Fly in the Ointment
It can't all be smooth sailing for Apple; the yin and yang of life demand that somewhere, something goes wrong. For Apple, the somewhere appears to be its App Store and how the company goes about approving submitted applications for distribution.
Developer anger over Apple's seemingly inconsistent approval process has been building for months, and it finally reached to the point where Apple had to take notice and address the furor.
Developers began turning to alternative ways of distributing their iPhone apps. The Cydia Store, a site that sells apps for jailbroken iPhones, is doing relatively brisk business. It has chalked up 53,000 sales totaling about $250,000 since it opened in March, according to Sean Kalinich on the blog TweakTown. Meanwhile, independent developer Steve Sheraton is selling an app for iPhones directly to the public from his Web site.
Perhaps that's what led Apple to reach out to App Store critics instead of treating them with its usual indifference. Last week, Apple executive Phil Schiller emailed angry developers not once, but twice. He said, in essence, that Cupertino is listening to developers' feedback.
Why the about-face? "Apple's trying to defuse users' anger and protect its image," Julien Blin, CEO and principal analyst at JBB Research, told MacNewsWorld.
"Apple won't admit this, but I think they're trying to protect AT&T's (NYSE: T) interest," he added. "Google Voice, like the Skype Mobile app, could damage AT&T's voice ARPU (average revenue per user) in the long run."
More iPhone app developers might turn to alternative distribution channels, warned Blin, but added this could be a tricky move. "I expect to see more app providers selling their apps directly through their Web sites, especially for companies focusing on things like mobile adult content," he said. "But that's a lot harder and takes a lot more work."
In the long run, however, Apple will emerge unscathed. "This might hurt Apple's image a bit, but that's it," Blin said. "Apple's bigger than that."
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