Amen to this article on the market

segmentation of smartphone users into discreet pools of consumer and business demographics. I posted way back that BlackBerry wouldn't make a consumer friendly phone, and although they did in the Pearl, which has a camera and MP3 player, there's no way it could touch the iPhone on the digital media capabilities. Don't get me wrong, I love my Pearl, but I do so because it's my "killer work email smartphone with a camera and MP3 player on-the-side" workhorse. And, as suspected, iBankers haven't been given the liberty to choose the Pearl's slim form factor option as a corporate-sponsored phone because it lacks the QWERTY keyboard. If you haven't noticed, QWERTY spells PRODUCTIVITY ON MY DIME. Sorry Goldman interns. Now, key to Apple's success in this venture is to make a killer email integration. I can't emphasize how important this step is. Without it, the iPhone is not a smart phone. I would imagine that Apple is going to be smart enough to recognize the demographic split as mentioned, and create seamless integrations with GMail and Yahoo, that leverage a UI that is iPhone specific (read: NOT GMail Mobile). At the same time, it will draw competition from RIM to enhance their media solutions, but this is inevitably in the pipe. Obviously a fool's bet to say that RIM will outplay iTunes, et al. but they need to improve just to stay competitive. However, that doesn't mean that Apple couldn't move into the business user space, but they now would have to replicate BlackBerry server functionality, and that's not in Apple's ballpark to focus on B2B services. Personally, I wish that RIM would get bankrupted by patent lawsuits and then once that's cleared, Apple could make a hostile takeover while RIM is cashless... cruel, but man, how perfect a device would be born out of that fire. No for the Boodos. WHAT IS UP WITH APPLETV? This product has got to be the weakest modern Apple product launch to date. Just when Apple seemed to be poised to  be the only  big player capable of preventing Microsoft from taking over our living rooms, internet television and subsequently... the world; Apple dropped the ball! Apple failed on this version of AppleTV because:

1. It doesn't stream videos from your desktop...
2. It doesn't stream videos from your desktop?
3. It doesn't stream videos from your desktop!?!?!
4. Doesn't let you purchase from iTunes
5. ....

Long term, Apple will correct these, but it's funny how analysts have just figured out how pervasive the internet TV

revolution could be on marketing, advertising and literally up-end mass media as we know it... because while Apple is just scratching this surface with AppleTV vision, guess what, Microsoft already has the hardware, distribution mechanism and loyal base of installed users. It's called the Xbox 360, and it does everything that AppleTV doesn't do yet .... today. I am utterly amazed by how ingenious the Xbox team are in creating this internet TV settop box, hidden and originally sold in a video game console's skin, that  has silently and subtlety made bill Gates the next Ted Turner or Rupert Murdoch. I should also point out the extreme luck that enabled this clean sweep. Sony failed to maintain their title of console king by absolutely blowing the PS3 campaign, from just about every perspective from design to operations. This opened the door for Microsoft to saturate the market, err, steal  the market from Sony. And now, Apple just helped by coming up short on the typically stellar launch of the AppleTV. The paradigm shift that traditional print media faced when the internet grew as a medium is a drop in the bucket, ad -dollar-wise, compared to the disruption the internet will bring by eclipsing TV. That's like hockey taking over major league baseball as the top sport in America. Again like the RIM quandries for the iPhone, you can parallel the differentiators for Microsoft XBox 360 and AppleTV. Apple has the content and licensing  model in iTunes, where Zune and whatever unheard of DRM platform Micrsoft has is infantile (can you smell a partnership?). On the other hand of the corollary, Xbox has the added benefit of appealing as a console to young gamers as well as a perceived cost / value benefit in that it serves as the dual use internet enable home theatre device. AppleTV, not so much on serving multiple age groups. Expect them to use the  iPod / iTunes community as leverage into the youth demographic. I end with a quote that I actually agree from Bill Gates (or I should say whatever visionary in his digital staff prepped him for) : "I'm stunned how people aren't seeing that with TV, in five years from now, people will laugh at what we've had."

Yes. Yes. YES, the iPhone is finally out. Nearly the entire IT industry came to a grinding halt as Steve Jobs announced the iPhone officially. Alongside some of the moust highly receptive praise from the analysts, comes the near certain barrage of doubts. We all know that fame begets criticism, and I'd like to share with you a piece from one of my favorite industry rags and stomping grounds of crazy-man Jim Cramer, The Street

. As much as I'd like to send out a big NYC boo-yah to Kaas, I've found several shortcomings in his argument. The vast majority revolves around a very myopic view of the product lifecycle, and it's phases. Just like enterprise software roll-outs, you cannot expect everything to make the first iteration, not just due to bandwidth limitations, but it's not practical from a feedback perspective, as you need to hedge your bets and adjust your strategy based on the success of each phase. High selling price spells limited marketing potential. An 8GB iPod nano and a high-end handset with similar features to the iPhone would retail for under $300, so the planned pricing implies a 100% premium for device integration and "the coolness of all things Apple." First, I'm not sure where he's getting his numbers. I think "similar features" is a stretch, the size of the Grand Canyon. Industry experts (you know, consumers?) agree that the benefits of usability are priceless. I don't know of a single phone that is more usable than the iPhone. Granted, the iPhone is not cheap - for now.  Like any product who's price is governed by evolving hardware, you're going to see prices fall - quickly. It's no guess that the highly proprietary (read: low production volume, demand and hence high cost) LCD touch screen is taking the lion share of the handsets cost. Expect this price to halve by next year. This is an old concept, and I won't waste time repeating it. Just look at the evolution of iPod pricing over the years. 2. Why not target the corporate market? One word: Blackberry. The last thing Apple needs to do as an emerging entrant in a completely new market, is make it obvious to the current market leader, that its going for it's throat. I blogged on the business vs. consumer segmentation prospects for the iPhone earlier, and still feel that Apple is not yet poised, or flat out even interested, in the business user sector. Microsoft and the stodgy B2B crowd usually beat Apple to the punch, simply becuase I don't think Steve Jobs and the rest of the Apple bunch love to serve that market, they love consumers, and each market has a separate set of expectations. Now, that's not to say that Apple won't ever go there. However, I don't see Apple recreating BlackBerry type functionality. I would love to see them partner with Google Office. Just a wish, here. More post upcoming on this topic.

Interesting how just weeks ago, before the fed rate pause, analysts were hammering Apple's price target down to 60. Some even had worse sentiment not mentioning, becuase it simply shows how narrowminded analysts can be. In fact, I love playing against the analysts advice. I love gaming analysts. Opportunity is found in what the market is not paying attention to, or has got all wrong. I ask myself if any of the analysts assigned to Apple even own an iPod or really are inspired by the business model, the process, the creativity. One of my biggest rules to investing is to only invest in tangible companies: one's you have first experience with, be it on a consumer or professional level. I guess I can't blame the analysts, as they have to play risk-averse ball in order to appease the masses. No one wants to lose their retirement on tech (again) right? I don't have to play no contact, however, and if the anlaysts had picked up on the subtle clue in the quarterly report given by the Apple CFO that the iPhone was indeed a reality, you could have caught Apple at low 60's. Now, Apple does happen to be up 8% in two days

since the announcement of the iPhone, and the analysts are of course, upgrading after the stock has already gone up. Thank the analysts when the stock pulls back as most would after such a rally (hint: if I bought Apple at 50, its recent 52 week low, I would consider selling at 72, lest I be considered greedy. You can't beat 50% in 3 months on a blue-chip). I set my target price for Apple at 75. I'm going to play hardball and ride it out to 85 just to save commissions on the sale. I strongly believe in setting targets for stock plays, as opposed to Index funds. Set a goal, score and go home. Don't expect lightning to keep striking in the same place indefinitely. Same goes for any gamble. That's why I've never lost money gambling. I wish I could say the same for the stock market. :) And yes, I'm even more excited about the iPhone! My mobile contracts about to expire and my beloved SE t610 is on it's last legs after 3 years of dutiful service.

Whew! After the Fed maintained rates, the market finally grew some confidence, replenishing support levels for several of my long positions. If you've been keeping track, I went long on Whole Foods (WFMI

) after it fell from 64. I dug deeper at 55 and even at 47, after the stock went through a cyclically enforced multiple contraction: basically, Whole Foods' stock was expensive relative to other peers in the food industry, such as Safeway and Krogers. It's PE was up in the 50's, while the competitors were half that amount. Hence, in a time of economic uncertainty, investors will not pay for stocks that are at a premium to earnings - in fact, those who are risk averse will actually short these positions and reap the earnings thus far, subsequently dropping the share price for others. Now, as I learned with Apple, high profile stocks with high multiples are very market sensitive, and are the first to fall to cyclical impacts. However, despite my humble and limited experience, I have learned that staring at chart prices is a complete waste of time - as you are not looking at the long term prospects. The question I asked myself when Apple tanked from 60 to 50 the day after I bought it, was the same question I asked with Whole Foods fall from 64 to 47.

Did anything about the underlying fundamentals of the business change?

The answer was no. Did the competition overtake? Did the company make a poor fiscal choices? Did management jump ship? Did any experience on a consumer level hint that the jig was up?

No.

So what's the explanation? Most investors, I'd hate to admit, are not looking at the long term. Long term wisdom is rare and it defines a successful investor (or gambler, for that matter). If you know something the market doesn't (or doesn't want to listen to because they are being emotional) then you have an edge.

I've learned it's a rookie move to bail on a stock (or mutual fund) if for only the stock price drops. Sure, this sounds obvious. However, you'll never truly know how it feels untill  you have a sizeable position, lets say,$10,000 in a fund, and it depreciates by $3,000. This happened to me with  Vanguards International flagship (VTRIX

). It's doubled for me in the past few years thanks to expansion in emerging markets, so when I lost almost 60% of that growth in this past May's bleeding, I panicked and I sold. Man, I have a knack for selling. Would you believe I sold at the absolute low, the trough at 35 before it immeidately ran back to the 40's?

Sweet. Selling actually cost me that $3000 I earned. Had I sit tight and researched more before pulling the trigger, I would have realized the truth behind my newest favorite saying:

Selling does not erase the loss. If it's down already, hold ship.

If you think about this, this strategy is (practically) infallible in the long term. The stocks will rebound just by the nature of economic expansion, even if by just accounting population growth. In other words, for one to state the market will not rebound (or grow) is not have confidence in economic expansion, period. In which case, we have a lot more to worry about than the market.

Selling should only be qualified by a change in fundamentals, market cycles or ... selling into strength. As in, you've made sizeable gains, and it doesn't pay to be greedy. Even the best play will sour at some point, when the big boys call the game over.

Now, having learned that lesson (from hard-learned experience, not just from a book), and the lesson of Apple, I applied this to Whole Foods. Did it bounce back from 47? Yes, its at 55 now. Why did I buy? Becuase the fundamentals didn't change from the time I bought at 64. Yes, the market was not favoring the stock in this cycle, but cycles come to a close. When the economy rebounds, Whole Foods will be dramatically undervalued. I've already made 18% on the play at 47. When it rolls back to 64, I'll have made nearly a 50% gain on the 47 buy.

All this tells me is that I bought WFMI too early. Sure, easy to say with 20/20 hindsight. Did I research? Sure, in fact it was down from 80, so 64 seemed like there was a misvaluation. Truth be told, this is my first market cycle to contend with, and I need to ride them out a few times to place my bets at better times.

Such is the fun of investing.

I guess you have to be careful what you wish for. My buddies at Engadget report

on a quote from the Q3 earnings call I listened to yesterday from CFO Peter Oppenheimer:

"As regards cell phones, we don't think that the phones that are available today make the best music players. We think the iPod is. But over time, that is likely to change. And we're not sitting around doing nothing."

Not a big surprise to the Apple following, but this is a considerably firm public statement regarding direction from management, which for Apple, is rare.

On a side note, Apple stock rallied in after hours trading, making for aboot a 13% gain in 2 days. Incidentally, I bought Apple stock at 60 and was a inch away from doubling down when it hit 50 a share. Had I been a more seasoned investor, I think I would have taken the plunge. At least its good to see that my fundamentals are inline. Next time!

We have yet to be offered a true contender for a highly consumer-friendly MP3 Phone. Apple needs to do this. And they need to get on this one... now. I'm really disappointed that Motorolla beat them to the punch with the V3 RAZR.  Playing MP3's on your phone old hat? Absolutely, Motorolla's V3 RAZR is not new, but it combines an already market-proven phone with a convergence idea that is golden. It trumps Cingular's play with iTunes, since its not iTunes that's going to sell cell phones. iTunes didn't sell me, or anyone, on the iPod at the first glimpse. Sarcastic voice, fist-shaking: "It's the design and interface of the product you fools!" The marketing, people, the product marketing... not tech. Someone please tell Microsoft that in regards to their magic WiFi bullet. I swear to god, the white earbuds have done more for capturing initial audiences than any other feature of the iPod, as it is immeidately recognizable. It's the Bently logo on your MP3 player's hood. Will the V3 dominate? I'm not certain that 1 commercial of a dude on a treadmill is going to rock the USA. Trendsetting consumers don't pay attention to cell phone commercials, becuase, well, they come off like car commercials, and we're all trained by the age of 3 to completely ignore those on a subconsious level. We do live in America, right? What makes people buy consumer electronics? By and far, things that are adopted by the uppoer crust as having adequate cool factor. Edit: Schomer raises a good comment about iTunes solid synchronizing capabilities having sold him on the sexy iPod (two points for alliteration?). Granted that this is a good thing, I think this more or less fulfills a customer's expectation more than exceeding one. I think grandpa would expect the synchronizing feature to work seamlessly, it's just such a fundamental requirement to any nontechnical person who can't appreciate the engineering feat. I think Apple did however exceed everyone's expectations on making MP3 player's and other tech paraphernalia sexy, which is critical for consumer products. I guess the real question is to counter Schomer's point, would the iPod have taken control of the market to the extent it has if it had iTunes, but had as lackluster an appearance and usability as an iRiver? I couldn't disagree more Market Trendsetting There's something to be said about convergence and the market forces... I know it's not as big a deal to most middle-Americans who can stuff several items in their pockets if only for the morning and afternoon walk down the driveway to their car. But for urbanites on the move, the thought of being able to haul around one less piece of techmass in their suit pants on the subway is priceless. Elitest, yes, but priceless. ;)  And we know from the cultutal dynamics of capitalist nations that the elite trends are often mimicked by the masses.

So, where are the problems for the V3? Not having a true competitor, I think the V3 will continue the bestselling trend of the RAZR. But the tipping point question is:

Is Motorolla really monetizing convergence as much as an Apple inspired iPhone would?

In this case, the consumer benefits more than the corporation, in the long run. Only Apple has the potential to benefit from convergence to such an extent to build synergies with music ordering, as V CAST is a joke compared to iTunes. I don't think there's any customer loyalty being built from a lifestyle standpoint. If someone comes out with a smaller, sexier phone and a challenging cell provider has equivalent support, I don't see a compelling reason why the elite will stick with the provider (assuming that cell phone coverage becomes a commodity over time, which it will. Go to Europe for proof, this is is not a long term competitive advantage.)

Grand Unified Lifestyle Theory

Now, on the other hand, if you tie in the lifestyle choices, the marriage to iTunes for your pod-casts, music, etc. you create glue. You stick the consumer to your service because there is a value add outside of the hardware itself. Obviously, this is highly dependant on what Apple can bring to the table in terms of an integrated electronic lifestyle. Given that it's common for consumers to not have a ShackleBerry, the lack of Office features on a mass consumer phone developed by Apple is not troubling. I'm of the faith that there will always be a divide between work and play computers, evidenced by console gaming vs. business machines.

Can Microsoft compete in this space? Sure, they can provide competitive forces, but given their recent track record of failing (read: Microsoft Live) all they will do is keep Apple on it's toes, perfecting their existing model, while Microsoft realizes they still operate like a enterprise software vendor. Untill Microsoft develops core values that recognize (and actually cater to ) the consumer mind, I think they're SOL.

I think what's more intriguing is the long term prospect of adopting a more (gasp) Web 2.0 mindset when developing consumer products. No, I don't think WiFi is here yet, we need better data plans in the US. But the prospect of incorporating aspects of iLife and iTunes on your cell phone are promising. I think if Apple can leverage this trend by realizing that they cannot limit to iLife, but instead should work this angle to leverge best of breed web applications, much in the same way Vox has (shameless plug!)

Why not  have Flickr house your cell phone wallpapers? Why not have your cell phone photos immediately sent to Flickr instead of sitting on your phone memory? Why not support mobile photo/video blogging (really support it, that is)?

Failure to Launch

As far as failing to move on the iPhone, who knows why. I do know that it's unfortunate that Apple didn't partner with Motorolla... just think of a white, iPod-esque RAZR as the Stage 1 iTunes phone. Why would this be better than Cingular's push? Well, the phone Cingular pushed stinks... it's an outdated clamshell. That's not iPod-sexy enough to make someone change cell phone plans and jump contracts, not by a freakin' mile. For now, I guess we'll have to sit on our hands, as perhaps Apple is focusing on their Windows MediaCenter counterpunch. Controversially enough, I'm a big fan of MediaCenter, despite the occasional freezing up, that is, of course. :)