Apple The Day After

CNBC.com

iPhone 3G

Investors can be a quirky bunch, especially when we're talking about Apple, and especially when they're "trading" instead of investing.

Case in point: the company's Worldwide Developers Conference in San Francisco when Steve Jobs unveiled the next generation of iPhone. No need to rehash all the particulars since they've been well-covered here and elsewhere. What's striking today, the day after that announcement, is the action in Apple shares.

Yesterday, they were all over the map: plunging, recovering, plunging, settling the day with a mild loss even in the face of what could be one of the most exciting platforms -- not products, but platforms -- this company has ever unveiled. Investors might have gotten it, but traders wanted more. Investors understand that Apple is perched atop of a digital entertainment revolution and is now offering up an electronic Trojan Horse that could do for enterprise customers what it's already done for consumers: Change the way we think about technology, and more importantly, change the way these dyed-in-the-wool PC owners think of Apple.

There were concerns that a price cut to $199 for the 8 gig model would erode Apple's revenue growth. Even though just about everyone I talked to said the price-point was absolutely key to iPhone's far broader consumer -- and enterprise -- appeal. And let's be honest: for $100 more, don't you suspect most customers will opt for the 16 Gig model anyway? So the revenue erosion likely won't be nearly as dramatic as some feared; and I'd argue that increased sales volume because of that lower price will more than offset it.

Then there's market penetration: Apple's internal goal to have iPhone in 25 international markets by the end of this year has been met. In spades. The company confirms that iPhone now sells in 70 countries, and Steve Jobs, for the first time, told me yesterday that he suspects a deal with China Mobile to be announced "later this year." Same goes with Russia. These are key developments for the company. And its investors.

Some were disappointed that Apple didn't introduce a 32 gig model, and that the official roll-out of the new model won't be until July 11, and even then, that initial introduction will only include 22 of the 70 countries that currently sell iPhone. So traders took Apple shares lower.

But what a difference a day makes, as investors -- and those traders -- start to appreciate the bigger picture here: iPhone is a platform, like the Mac and iPod before it. It is a phone. But as we learned yesterday, it's not some watered down computer in your pocket. It's your desktop in your pocket. It's a game-player, with some awesome titles on the horizon. A camera. It's a GPS device. It's secure. It's good for consumers. Good for businesses. Now far more affordable. Super-fast. In less than a year, iPhone has become the "about-time" device mobile users have been clamoring for. Yeah, it's about time. And this is all about the next generation for Apple.

I'm not saying there won't be a pitched battle with the likes of Nokia and Research in Motion , but Apple's got momentum on its side, and rather than being a pure-play in the cell phone market like those other guys, Apple's got Mac and iPod revenue streams as well.

Investors have known all this for a long time. I gotta think traders are now beginning to grasp all this as well.

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