Analyst: Apple to Enter Cell Market, But Not Today

| Apple Stock Watch

American Technology Research (ATR) analyst, Shaw Wu, thinks itis inevitable that Apple will enter the cell phone market, but probably not until mid-2007 at the earliest, and more likely some time in 2008 or 2009. When Apple finally enters the market, it is likely to offer a well integrated package, similar to the iPod and iTunes.

Appleis entry into the cell phone market will require FCC approval, and Apple would have to file for approval at least three months in advance. To date, no filing has been made. Since the filing is public, the company would likely make a product announcement at the same time as the filing, offering consumers several weeks lead time before phones are available.

The service will also most likely operate as an MVNO (mobile virtual network operator), offering its own phones and service while teaming up with a carrier like Sprint to provide the communication infrastructure. By offering an end-to-end package, Apple should be able to offer a product that provides a better user experience. "Moreover," Mr. Wu says, "we believe its 147 Apple stores would come in handy" for presentation and distribution of the phones.

During the interim while we wait for Apple to announce its own cell phone products, other manufacturers, like Motorola, are likely to continue releasing iTunes compatible phones. Apple is also likely to sign deals with other phone manufacturers, too.

ATR is maintaining its "Buy" rating and US$101 price target, and feels Apple is moving on a multi-year track into the digital entertainment market. Apple is currently trading at $58.41, up 1.41 (2.47%).

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