Apple Tablet Fever Has Wall St. Temperatures Rising
Lawsuits, shmawsuits. All Apple investors seem to care about at the moment is the sizzling hot Apple tablet that had better make its appearance next week, considering all the energy and emotion surrounding it. Will it be the product that defines a category, ruining the hopes of all other tablets? Meanwhile, Apple's patent tussles with Nokia and Kodak are barely blips on the radar.
Jan 20, 2010 5:00 AM PT
Apple's share prices soared on Tuesday as media reports began to take it for granted that the vendor would launch its much-talked-about tablet Jan. 27. Apple shares closed at US$215.04, up 4.42 percent from Monday's closing price of $205.93.
The market appeared to discount Apple's entanglement in a legal thicket -- Cupertino is embroiled in lawsuits with both Nokia and Kodak.
Meanwhile, signs that Apple will improve its showing in the corporate market are emerging, which is yet another positive indicator for the company.
Finally, news that the mobile applications market will soar put the icing on Apple's cake, as its iTunes App Store thoroughly dominates this arena.
Smooth Not-So-Little Pill
The speculation is that Apple will unveil a 10- or 11-inch tablet priced at about $1,000 on Jan. 27. The rumors got a boost when Apple's lawyers sent a cease-and-desist letter to Gawker Media and its Valleywag blog after they had publicly offered up to $100,000 in cash for photos of the Apple tablet last week. That reward is tantamount to offering a bounty for the theft of Apple's intellectual property; it would induce people to break nondisclosure agreements or share trade secrets, the letter pointed out.
"I think Apple was right to call Gawker out over its funding of what is, in essence, big-budget corporate espionage," Carl Howe, director of anywhere consumer research at the Yankee Group, told MacNewsWorld. "Anyone who knows anything has a nondisclosure agreement pending, so any disclosure would be a violation of an Apple trade secret, and that would be legally actionable."
Apple will have to provide content on the tablet in order to make it interesting. It has been holding talks with publishers both in the U.S. and abroad to put their content on the device. The tablet may support iTunes LP and cloud storage, through MobileMe. The technical details aren't important to investors -- what we need to know is, will the tablet be a must-have product with hot features or not?
Music and cloud storage are hot. Newspapers and other reading matter -- possibly. The price? Well, if Apple offers it at at $1,000 a pop, more than twice the $489 Amazon asks for a Kindle DX with a 9.7-inch screen -- nope.
On the other hand, Apple has proved to be savvy at marketing, and it has cut prices on its products recently. So, if it is indeed coming out with a tablet, look for the device to be offered at a price not too much above that of the Kindle DX. If it keeps the $1,000 price tag, however, investors should prepare to run for cover.
Still, this could all be much ado about nothing -- the tablet might be announced Jan. 27, but it will probably be released in June, Kaufman Bros. analyst Shaw Wu said.
This is in line with Broadpoint Amtech analyst Brian Marshall's long-held view.
If that's the case, investors will have to brace themselves for a bit of a roller-coaster ride. Apple shares will likely shoot up Jan. 27, then dip over the next few days as it becomes apparent the device won't hit retail shelves for awhile. The extent of the ups and downs will probably depend on overall market sentiment as well as Apple-specific information.
Apple and the Courts
On Monday, Apple fired another salvo in its legal battle with Nokia. It filed a complaint with the International Trade Commission requesting the ITC ban imports of Nokia mobile phones into the United States.
This follows Nokia's complaint to the ITC in December 2009 that Apple had infringed its patents.
Apple is also facing a lawsuit from Kodak. Filed Jan. 14 against both Apple and RIM, this suit alleges the two infringed Kodak's digital imaging technology.
Will these lawsuits begin draining Apple's plump treasury? No, they're just moves in a game of marketing and technological chess, Yankee Group's Howe said.
"Apple's competitors, particularly Nokia, are using legal tactics to try to get it to play their game of cross-licensing and generally sticking with the crowd of me-too products," he explained. "Apple prefers to have differentiated products and marketing. I suspect this will turn into a tale of legal paperwork, signifying nothing."
Cashing In on Corporations
Systems management vendor KACE predicts that more and more companies will begin adopting the Mac OS X platform in 2010.
"Snow Leopard provides much easier integration into Windows environments, which is helping break down the last vestiges of Windows-only platform support policies within organizations," KACE Chief Technology Officer Marty Kacin told MacNewsWorld.
"This -- combined with the growing trend of a younger generation of workers who have grown up on Apple technology and have been pushing for the tools they prefer; plus the reduced costs of Mac products and a year where a desktop refresh will be in full swing -- [has] us believing that Mac will finally hit critical mass in the enterprise this year," Kacin said.
Snow Leopard -- that is, Mac OS X 10.6 -- was released in the fall of 2009. Smaller organizations will be more likely to adopt Macs because they have less formal policies on platforms in their environment, Kacin said.
This means that Apple will gain strength in a new market that it has only just begun to penetrate. In a year when Forrester predicts that IT spending will pick up, with computer purchases increasing 8.2 percent, this could translate into a decent sum of money.
Can You See the App Now?
The mobile apps market is hot, and going to get hotter, according to Gartner. Consumers will spend $6.2 billion on mobile apps and download more than 4.5 billion of these apps, this year, the firm predicted. By 2013, worldwide mobile apps will exceed 21.6 billion.
Free apps will account for 82 percent of mobile app downloads this year and 87 percent by 2013, said Gartner. Games will remain the leading app.
Now, Apple's iTune App Store is the undisputed king of app stores. It soared past the 3 billion download mark Jan. 5. Guess who's going to be sitting pretty right into 2013 in the mobile apps market?