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Is Apple Master of the New Paradigm?

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By JJMSpartan
March 12, 2008

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Shamelessly copied and pasted from my CAPS Blog...
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=39078&t=01005351744494888572


I'm going to make this as simple as I possibly can - if you don't have AAPL shares yet, get them soon. Preferably before the inevitable announcements of new software for the iPhone start rolling out. Definitely before SJ announces that they have sold 5 Million iPhones - and that could be coming VERY soon. Because a tsunami is coming that will carry AAPL shares into the stratosphere. I've been bullish on AAPL for a long time, but I've never gotten whipped up into a frenzy like this.


I'll say this once - go download the presentation from the iPhone roadmap last Thursday as a free podcast on iTunes and watch it. You won't read an article that can truly express how impactful that presentation was.


The two items AAPL unveiled to the world last Thursday are so monumental that it's hard to comprehend the total impact of what they will deliver. First, the upcoming enterprise tools will open a LOT of doors for the iPhone. There are a lot of companies who have held back on letting people get iPhones because of the lack of those exact tools - my company being one of them.

Case study - previously, my employer has said that no iPhone would be allowed on our network. Period. Didn't matter that nearly all of our executives had them, they just weren't secure enough. Well, apparently our CIO was told by our CEO on Friday after he had heard the news about enterprise functions that the IT department WILL SUPPORT THE IPHONE when the enterprise function became available. Period. Because by noon, we received a corporate wide e-mail indicating that the iPhone would become available as a business tool with the release of iPhone firmware version 2.0. Trust me, it's a radical turnaround for our corporate IT department. I have to believe that there are many other companies that will be in nearly the same boat.

The potential impact of this is huge. By making the iPhone enterprise compatible and ready, one of the most significant barriers to adoption of the iPhone by businesses has just been removed. This could create a significant number of new purchases and allow Apple to blow past the 10 Million mark on it's own. But then there's the other announcement...



The other item that was released - the SDK, by all rights should have been just a "finally!" type of event. But then Apple, as they have a tendency to do, showed me a few things that made my jaw drop. If I had simply seen the quick demo of developing a "Hello World" app in under 2 minutes, I would have been impressed. But the real shockers came from the developers Apple invited to work for 2 weeks prior to the show on the SDK.

I'll talk about these in terms of how I group the apps demoed. First, the two business class apps - Salesforce.com and Epocrates. What jumped out at you was how polished and far along these apps looked - especially when you understand they were only working on them for 2 weeks. Salesforce.com even had only a single programmer working on their app, yet they had graphing tools, database hookins, reports, and a whole mess of stuff in their app. In only 2 weeks! Epocrates showed the power of how the device could be used for medical professionals with a drug reference and lookup. Clearly, this would be a very handy tool for that profession.

Next, the more casual pleasure apps - AIM for iPhone and Apple's own picture manipulator program called TouchFX. To see how complete AIM for iPhone was in 2 weeks, it was impressive. Multiple chats, icons, create your own new icon on the fly, etc. It looked like it was dang near ready already. The TouchFX program was impressive in that it made use of the multi-touch interface to create cool effects on pictures. It looked really cool to see that you could erase your manipulations by shaking the iPhone (you really need to watch that part...). And that app was built in all of 2 days. WOW...

Then came the real WOW of the presentation - the games. Apple started it off with their own "Touch Fighter" which already had my jaw dropping. It looks like a basic space-fighter type game, but you steer by tilting th iPhone and fire by tapping the screen. Check out the video.
http://www.youtube.com/watch?v=-O7cAjUyX54

Let me repeat - you tilt the phone to steer! The accelerometer in the iPhone is a 3-axis accelerometer, so it lets you do all kinds of crazy things in respect to gaming! I immediately thought that the potential for this is similar to the Wii for portable gaming - you are no longer pushing buttons to control, you're turning the entire device. My mind was already racing as I was imagining how cool a NASCAR type game would be on the iPhone...

I had barely gotten my mind around that concept, when EA displayed Spore for the iPhone, again developed in only 2 weeks. I can't really describe it any better than to simply point you at the video clip of the Spore intro on YouTube.
http://www.youtube.com/watch?v=u5xA8-XvjNk

As if that weren't enough, then came Sega. I hadn't really thought too much about Sega until I saw the game they demoed - Super Monkey Ball. Again, it's best to simply watch the YouTube video as words can barely express how cool it was.
http://www.youtube.com/watch?v=4a6-cUOPoLY

So where am I going with all of this? Simple - Apple has in one fell swoop added so much additional value to the iPhone and iTouch that the sales goal of 10 Million iPhones this year now seems not only reachable, but like it might be significantly lowballing the real possibilities. Think of it this way - AAPL has already taken 28% of the smartphone market in the US in 9 months with a device that most companies won't let on their corporate systems. They've sold over 4 million iPhones that haven't had any gaming capabilities, yet nearly every High School and College kid I know already desperately wanted one. These are HUGE markets, and they are screaming for this device. I'm not even factoring in the ever-rumored 3G iPhone that would up the data speeds when not on WiFi.

I've been long AAPL for a while. I had thought I had enough in my portfolio already. I'm now seriously considering adding more. In my mind, this event was HUGE. The sky is the limit...

Sparty