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Apple (Nasdaq: AAPL) stock closed at US$197.05 Tuesday, down $3.37 after a five-day rally that saw it hit $203.08 Friday.
However, that slide was part of an overall market phenomenon. On Tuesday, the Dow Jones Industrial Average shed 100 points and the NASDAQ composite index lost about 29 points as consumer confidence took a tumble. Major retailers indicated that sales growth is lagging, and economic reports remain mixed.
The question for Apple investors is, what's going to happen to Apple's share prices? They have been slipping since they peaked at $215.04 Jan. 19, and it's only natural to wonder if this trend will continue.
Apple seems confident of its future, however. Besides the launch of its upcoming iPad, it's advertising for an engineering manager who will apparently work on new platforms for the iPhone OS. It has also raised the cap on over-the-air downloads from its iTunes App Store from 10 MB to 20 MB, suggesting carrier AT&T (NYSE: T) is able to handle bigger burdens. Further, the iPhone gained ground in the worldwide sales market, taking over the third spot from Windows Mobile.
Meanwhile, Cupertino has gone all puritanical, booting purveyors of risque apps from the App Store, although there may be less to this than meets the eye. Apparently, it's only targeting small-time developers of the R-rated, leaving the biggies such as Playboy and Sports Illustrated's 2010 Swimsuit Edition untouched.
Help Wanted
On its Web site, Apple is advertising for a "talented and inspired" engineering manager to lead a team focused on extending the iPhone operating system to new platforms. The candidate must work with Apple's hardware and custom silicon teams to bring up new platforms and prototype systems.
Other tasks include defining the roadmap to support a range of hardware platforms, including the iPhone and iPod; and leading a team to help develop requirements for future hardware and custom silicon. Oh, and the candidate must also understand how to design a system-on-a-chip, have experience with ARM-based systems on a chip, and have developed mobile platforms running Unix-like operating systems.
This all sounds as if Apple plans to further leverage its estimated $1 billion investment in the A4 chip it had custom-made for the iPad. "Sure, they're going to add new devices built around this chip," Carl Howe, director of anywhere research at the Yankee Group, told MacNewsWorld. "They probably have a plan that involves creating all kinds of devices that consumers might want with the new silicon."
The A4 chip includes an integrated graphics core on a system-on-a-chip, or SOC. SOCs combine multiple functionalities in one chip, and they help cut costs compared to traditional chips.
"The fewer components you have in a product, the lower you can price it," Howe explained. "By pulling lots of functions into this one chip, Apple reduced their parts cost, which means they can sell it at a lower price and still make a decent profit."
Forget the Loaves and Fishes
Meanwhile, reports are circulating that Apple has quietly raised the size cap on applications downloaded from its App Store over AT&T's 3G network from 10 MB to 20 MB. Previously, any app over 10 MB had to be downloaded via either a WiFi connection or a Web-connected computer. That's an apparent sign of confidence that the billions of dollars AT&T has spent on upgrading its wireless network will pay off, especially as Apple is scheduled to release an iPad with 3G support in April.
AT&T isn't talking. "You are going to have to contact Apple with regards to those questions on limits," Steven Schwadron, the carrier's spokesperson, told MacNewsWorld.
Perhaps AT&T's remaining silent because the raised limit is a market test. "If you increase the cap quietly, then AT&T can test to see if it can handle demand without going full throttle," Josh Martin, a senior analyst at Strategy Analytics, pointed out.
AT&T has apparently been expanding the limits of the iPhone's activity on its network for some time. Earlier this month, the carrier announced it had decided to allow SlingPlayer Mobile for the iPhone to stream video from a Slingbox over its 3G network. Users can now also make VoIP phone calls over a 3G connection rather than WiFi. "It seems AT&T's got a large degree of confidence in its ability to handle these demands," Martin told MacNewsWorld.
The iPhone itself is also doing well -- on Tuesday, Gartner (NYSE: IT) issued a report stating the device nudged out Windows Mobile for the third place in global sales for smartphone platforms.
Gartner expects the iPhone to continue its strong showing.
If AT&T's network has been beefed up to the point where iPhone users might actually be pleased with it, that could further boost iPhone sales in the U.S. For investors, that's a good thing.
Doing the Hoochy-Coochy
Last week, Apple began expelling off-color apps from its App Store. We're talking about apps with names like "Sexy Girls" and "iWobble." Apple has always reserved the right to spit out objectionable material from its App Store, and in this instance, the company was forced to walk a thin tightrope. On one hand, some users find the content of these apps objectionable, and some merely think they clutter the App Store with useless wares.
On the other hand, the fact that these apps were there in the first place proves that someone out there likes them and that some developers out there were making money from them. There are big bucks in anything X-rated (though in this case, more like R-rated), which means Apple could be turning away a lucrative source of income.
However, Apple is apparently not going all-out to get rid of naughty apps; as of Tuesday afternoon, a Sports Illustrated Swimsuit 2010 app was still available, as was a Playboy app.
While Apple's offering of R-rated apps may be morally or ethically questionable, there's no question that anything naughty brings in the cash, and to investors, the only real sins are losing money or refusing to carry money-making products. The blessings of capitalism be on Cupertino.
