Yesterday, CEO Steve Jobs bid adieu to the name Apple Computer (NASDAQ:AAPL). No more shall the Mac Daddy be just, well, the Mac's daddy. Jobs says the firm he co-founded will now simply be Apple, Inc. And that can only mean one thing: A litter of consumer-electronics siblings for the Mac is on the way, beginning with the long-awaited iPhone, announced yesterday.
How did investors react to the news? Like a hyperactive 2-year-old on a sugar high; Apple's stock is up more than 12% since Monday's close, and it's rising as I write this.
Still cool after all these years
I can understand why. Chief among the many concerns harbored by stock-pickers is whether Apple will be able to continuously channel "cool" for every market that it enters. The prototype iPhone put that question to rest for a while. It's oozing with style, and functionally, it looks as strong as anything offered by Palm (NASDAQ:PALM), Nokia (NYSE:NOK), or Research In Motion (NASDAQ:RIMM).
Consider how it handles voice mail. With my Treo 600, I have to dial a number and listen to voice mail in the order in which it was left. With the iPhone, I'd be able to look at all the voice mail I have, and select which messages I want to listen to and which I want to skip. Think of it as an email inbox for voice messages.
Apple says it will team with Cingular to offer the iPhone, which will be available in June in two models. A $499 version will carry 4 gigabytes of storage, while the $599 model includes 8 gigs of space for music, videos, and the like.
Apple reinvents the phone
During his keynote, Jobs told the Mac addicts in attendance that the iPhone changes everything when it comes to mobile phones. Really? Other phones have Wi-Fi. Other phones also play music and videos. Still others feature email and text messaging. What's so darn special about the iPhone?
It's a good question, but I think Jobs is right. There are two ways in which the iPhone firmly stands out. First, there's its interface and user-friendliness. Go back to voice mail. Or consider the device's Web browsing capability. Users can zoom or realign the screen horizontally, making it easier to read any Web page. That's a major improvement over what I can do today on my Treo.
Second, and more importantly, there's the built-in iPod. There's not much new here in terms of functionality, so why does it matter? It's another way to stiff-arm iTunes opponents such as Verizon's (NYSE:VZ) VCAST, which aim to convince users to download music from their cellular networks.
So far, that effort has done little to dampen enthusiasm for iTunes, which Jobs says has sold more than 2 billion songs, and which still owns more than 60% of the digital music market. By giving the iPhone iTunes and equal standing with Macs and PCs, Apple could make other music-playing phones and specialized networks even less attractive than they've been to date.
The dawn of the iEmpire
But the iPhone is just one gadget. Others are surely in the works. One, the iTV, introduced at a September event, was dubbed Apple TV by Jobs yesterday. It will be available next month for $299.
For those who don't recall, the iTV is a device that connects to any television, allowing iTunes downloads to be wirelessly delivered for viewing. It's not a replacement for the pioneering digital video recorders made by TiVo (NASDAQ:TIVO), because it can't pause or record live TV, but it's as close as I've yet seen.
And that leads me to ask: What's next? By recasting Apple Computer as Apple, Inc., Jobs has signaled his intent to do what Dell (NASDAQ:DELL) did when it made a similar change years ago. Surely that hasn't worked out as well as founder Michael Dell had hoped. Can Jobs really expect better results?
Why not? In the coming days, there's going to be a strong temptation to say that, because the days when the Mac always had center stage may be ending, Apple has given rise to a new iEmpire, where gadgets rule and computers serve.
The Cult of Mac is alive and well
Hogwash. The truth is that, with iTV and the iPhone, the Mac has never been more important than it is now. Jobs is merely making a strategic bet. By surrounding users with cool gadgets that offer a peek into what a Mac can really do, and by making the Mac a digital hub for entertainment, Apple hopes to sell more computers. A lot more computers.
And it might, especially if Jobs' goal for the iPhone is realized. He hopes to gain 1% of the global market for mobile phones by the end of 2008. At 1 billion phones annually, that's 10 million handsets. There are only 30 million to 40 million Macs estimated to be in use today.
Embrace and extend
It's most extraordinary for me how well Apple is following the old Microsoft (NASDAQ:MSFT) tenet of "embrace and extend" in creating its own iEmpire. History shows that Mr. Softy torpedoed Netscape and others by embracing and extending any innovation that threatened Windows' hegemony. Apple's approach, though different, is still aimed at ensuring the success of the Mac at the expense of rivals. Otherwise, Apple would have left the mobile market to Verizon and its peers.
That's where the new Apple, Inc., sets itself apart. The Mac Daddy has become more than the Mac's daddy. It has been transformed into an iEmpire where the Mac is no longer the troubled teen -- it's the aspiring prince hoping to ascend to the throne of the digital entertainment realm. With the iPhone, I sense that Jobs has taken yet another step toward coronation.
Dell, Palm, and TiVo are Stock Advisor picks. Dell and Microsoft are Inside Value recommendations. You can try out any of our newsletters free for 30 days.
Fool contributor Tim Beyers, ranked 1,399 out of more than 19,600 in Motley Fool CAPS, is a sucker for growth stocks and a regular contributor to David Gardner's Motley Fool Rule Breakers service. Tim owns shares of Nokia. Get the skinny on all of the stocks in Tim's portfolio by checking his Fool profile. The Motley Fool's disclosure policy is a rebel on Wall Street.
