Nofie Iman

Jobs was talking to Gates on a conference last week. “You and I have memories longer than the road that stretches out ahead,” he said. And there were moist eyes in the audience. Two of them are likely to continue jostling each other on that road ahead for some time longer (The Economist, June 7).

Jobs is an archetypal pioneer, building some innovative stuffs decades ago, while Gates is an archetypal industrialist. He is making money by being the first to recognize how to charge for software as a separate piece and using that to dominate the industry — at Apple’s expense.

Nowadays, it seems that the odds are on Jobs and Apple as the winner. The success of the iPod and iTunes has been remarkable. Jobs is pretty sure that selling more than 10 million iPhones by the end of 2008 is very possible. As a phenotype, iPhone is the winner in design and simplicity. While others are cluttered with mechanical buttons, iPhone has exactly one, called multi-touch technology. iPhone, with a lot of automated functions, also uses the Mac OS X and Safari just like Apple’s computers use.

As we might already know, the first iPhones are now on their way to Apple’s American retail stores, and will arrive in Europe later this year and in Asia next year. Only in a few weeks, investors are driving Apple shares to unexplored territory. AAPL has doubled in the past year to $122 and its market cap recently topped $100 billion for the first time.

According to JMP Securities calculations, AAPL is underpaid (BusinessWeek, June 18). Mac product line, with revenues of $11.7 billion and 11% net margins, would be worth $42.7 on its own. iPod, with $10,8 billion and 12% margins would be worth $38.87. Add $6.76 for Apple TV, $5.91 for software, and $14.18 in cash; you’re already at $114.78. Without any help from iPhone.

On the other side, it has come to our attention that iPhone’s battery is mediocre and vexing because it will be irreplaceable. It also uses a data network which is slow compared with 3G. And don’t forget the absence of a mechanical keyboard. With an entry price of $499, it seems that iPhone may prove too expensive.

Still, Apple will need to execute flawlessly. It is also very interesting to speculate how much market share Apple can steal and how much it can expand the overall smartphone market. If Apple can expand it from a luxury carried by road warriors into an everyday tool for the masses, Apple could soon see a new growth tear.

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