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The iPhone as Teacher's Pet, Investor's Moneymaker, Android's Target

By Richard Adhikari MacNewsWorld ECT News Network
May 13, 2009 4:00 AM PT

Shipments of Android smartphones will grow faster than iPhone sales this year, according to research firm Strategy Analytics. However, Apple will still remain king of the smartphone hill, and analysts -- namely Kaufman Bros.' Shaw Wu and Susquehanna Financial's Jeff Fidacaro -- are rating it a "buy."

The iPhone as Teacher's Pet, Investor's Moneymaker, Android's Target

Small wonder -- corporations see iPhone apps as a new way to market their products. Drawn by the possibilities, investors have pumped funds into surrounding startups, including one that serves up ads within iPhone apps -- and Android apps as well.

Meanwhile, Apple's efforts in the education sector, one of its traditional strongholds, may get a boost. The University of Missouri School of Journalism has mandated that students carry and use an iPod touch or iPhone, a move that may have other universities following suit.

Android Explosion

"Android is taking mindshare from Apple, and it is fast becoming a serious competitor," Strategy Analytics analyst Thomas Kang told MacNewsWorld. The company's research shows the Android operating system will grow 900 percent this year.

Apple's iPhone operating system will be the runner-up, with a growth rate of 79 percent.

Increasing acceptance in Europe and Asia, inexpensive licensing, Android's semi-open source structure and Google's support for cloud services have drawn support from various smartphone manufacturers, Strategy Analytics said.

Just one thing, though: It's easy to rack up a 900 percent growth rate when you're starting from a very small base like Android is. Remember, it was commercially launched only last year.

Apple Will Still Rule

Apple will still remain dominant, although competition from Android and the Palm Pre will heat up, Kang said.

However, many of the coming Android phones will not be available until the end of the year, according to Gartner analyst Ken Dulaney. "Android will be able to take advantage of an expanding smartphone market, but that market is growing by leaps and bounds, so there is more than enough room for all to grow at this point," he told MacNewsWorld.

That's good news for Apple, as the iPhone platform is now a linchpin of its business.

Analysts Show the Love

On Monday, two analysts issued bullish notes on Apple.

One, Shaw Wu of Kaufman Bros., increased his price target from US$152 to $160. He noted strong demand in overseas markets and said Apple's goal of maintaining a 30 percent long-term profit margin could be conservative.

The other, Jeff Fidacaro of Susquehanna Financial, said Apple has significant growth opportunities ahead, including new iPhone markets, like China; the arrival of new iPhone models; and developing completely new devices.

China has proven a difficult nut to crack in terms of befriending a wireless carrier there, though a breakthrough could be highly lucrative. Interim CEO Tim Cook announced at the company's second-quarter earnings conference in April that it will bring the iPhone to China by next year.

Advertising With iPhone Apps

Several corporations, including Burger King and Zippo, have put resources toward developing promotional software apps for the iPhone, according to The Wall Street Journal.

Some have managed to achieve relative success. Zippo offers a virtual lighter app that has been downloaded more than 3 million times, for example.

The chance of making a buck on the ad market for iPhone apps is beginning to lure investors.

Venture capitalists Foundry Group recently led a $4 million Series A round of financing for Medialets, an 11-month-old startup that serves up ads on iPhone apps and Android apps. Other investors in Medialets are DFJ Gotham Ventures and Bobby Yazdani.

Launched the same day as Apple's App Store, Medialets measures the usage of the top 20 applications downloaded on the iPhone platform.

An Apple for the Teacher - and Students

Although Apple has long been a fixture in the education sector, the University of Missouri's School of Journalism has taken things one step further -- it now requires journalism majors to have either an iPod touch or an iPhone.

New students there will download freshman-oriented information and course material onto these devices.

The university's computer store, TigerTech, estimates that 90 percent of Missouri students have iPods, and the school says it's trying to take advantage of the device's popularity to use it as a channel for course content delivery.

Students can include the cost of the iPod or iPhone in financial aid packages if they are deemed eligible, the department said.

More important, though, is what this could mean to Apple: If the idea catches on and other departments and universities follow suit, Apple could expect a huge boost in sales -- and one that will come around every year as new students enter the system.

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