I read AFB daily and have the utmost respect for the moderators and others here who are hyper-bullish on AAPL— I am firmly in your camp. You’ll have to take my word for it, but suffice it to say that if you saw my portfolio allocation and degree of leverage you’d have no doubt. That said, understanding and evaluating risk is important for any investor—even if it’s not as fun to consider the downside.

What are the chief potential stumbling blocks, things that *could* either delay or derail AAPL’s projected growth trajectory? What events would be red flags or precursors to correction or erosion?

Whether related to Apple itself, products, markets, legal issues, or broader economic conditions?

If you would be kind enough to contribute your thoughts, I will compile responses and edit this initial post to include a poll. Apologies to those who are annoyed by this subject. Then again, those who are knowledgeable enough to be certain of Apple’s golden future are also likely best-equipped to evaluate the risks.

There are some definite potential roadblocks ahead.

Just a few to start:

What’s going on in Germany regarding the iPhone is one potential roadblock. The monthly carrier revenue is essential to the iPhone’s revenue model.

The iPod will face more competition in the year ahead. This Christmas season should produce any 1st fiscal quarter with blow out results and rising ASPs. However, more and better competition may be seen next year.

Apple needs to deliver on 3rd party solutions for the iPhone. Following the Christmas quarter Apple also needs to deliver functionality updates to keep the product fresh and remain ahead of the competition.

Mac unit sales growth may moderate in 2008. The much anticipated update to the Mac Pros must be delivered in a timely manner and Leopard leveraged aggressively as the answer to the virus prone and heavy overhead Vista OS.

Apple needs to roll out retail stores in the EU and do its best to replicate it retail success in the US. There aren’t a lot of locations left in the US that will provide for the level of retail traffic and exposure to Apple’s prime demographic groups the company has experienced with its first 200 stores.

Major studios may continue to hesitate in making movie content available through iTunes. The sooner Apple can deliver more content and perhaps movie rentals the better.

That’s it for now.

Re: Red Flags and Roadblocks

[quote author=“lumi”]
What are the chief potential stumbling blocks, things that *could* either delay or derail AAPL’s projected growth trajectory? What events would be red flags or precursors to correction or erosion?

Whether related to Apple itself, products, markets, legal issues, or broader economic conditions?

[list]
Steve Jobs continued leadership of the company is still essential. We all know how his idea of what works and what doesn’t permeates the decision thinking process at Apple, but Apple must learn to do without him, otherwise it will not be a great company. General Electric has done a great job at creating internal leaders that are excellent managers and have kept the company at the top of corporate America for a century. Apple must have it’s own management creation process in place.

Corporate hubris. Signs that the company starts believing it can do no wrong and that customers will buy anything they produce will be when the company has peaked. Apple went through this phase in the late 1980’s and we all know how that ended. Apple’s insistence on revenue sharing with the networks just to sell a Jesus Phone would be nice for us shareholders, but there is a wider world out there that has laws against such restrictions on trade. I hope that Apple/SJ doesn’t shoot itself in the foot if it insists too much on these revenue sharing deals.

Inability to build lasting partnerships. As SJ himself said at All Things Digital that Apple has to learn how to make better partnerships. Never has Apple needed more content and networking partners than before. It needs to work with music and movie companies, with it’s own set of histrionics, and then with the highly regulated and staid cell-phone networks.

Souring US relations with China and the rest of the world. A trade war between the incumbent superpower and the aspiring one are likely to derail Apple’s (and most of corporate America) growth. It will be more expensive to outsource and then sell to China, which has one of the most rapidly growing and homogeneous middle classes of the world. Given the poor job the US has done in managing its international relations, this is a growing possibility.

[/list:u]

[quote author=“DawnTreader”]What’s going on in Germany regarding the iPhone is one potential roadblock. The monthly carrier revenue is essential to the iPhone’s revenue model.

But is it? How much of that extra price tag on an unlocked iPhone goes to Apple? I would say most of it with a small cut going to the retailer. How long is the carrier revenue agreement in place? Will Apple still get a cut past two years? If not, then the increased handset price will probably offset most of the lost carrier revenue.

What’s the likelihood of Apple starting their own MVNO once the initial exclusivity deals are up?

[quote author=“wheeles”][quote author=“DawnTreader”]What’s going on in Germany regarding the iPhone is one potential roadblock. The monthly carrier revenue is essential to the iPhone’s revenue model.

But is it? How much of that extra price tag on an unlocked iPhone goes to Apple? I would say most of it with a small cut going to the retailer. How long is the carrier revenue agreement in place? Will Apple still get a cut past two years? If not, then the increased handset price will probably offset most of the lost carrier revenue.

What’s the likelihood of Apple starting their own MVNO once the initial exclusivity deals are up?

Storm in a teacup. Doesn’t matter. The vast majority of people want an experience that “just works,” and that means an iPhone on the partner network complete with WiFi, EDGE, Visual Voicemail, working widgets, and suchlike.

As for longer-term issues, again - irrelevant. Who keeps their phone longer than 2 years anyway? Anyone with an iPhone 1.0 in two years time is simply going to buy an iPhone 2.0 on a new 18-24 month contract.

I am seriously unworried by any of these continental shenanigans.

Big picture wise the only concerns I have about Apple’s future is that the international trading community and especially Asia keep respecting intellectual property rights, Patents and trademarks.

edit: a great topic lumi

Congrats lumi! 

Re: Red Flags and Roadblocks

AW Cabot,

Steve Jobs has one of the best management teams on the planet working with him, including Tim Cook, Phil Schiller, Ron Johnson, and Jonathan Ive. I am far less concerned about Jobs retiring (many years off anyway) than I have been at any time since he rejoined the company. I agree that as far as the market is concerned, its a “big deal” though. But you might as well worry about him being run over by a bus.

As for corporate hubris, I don’t feel this to be an issue. Corporate arrogance to some degree, yes, but hubris? No. Witness the quick response from Jobs when he came under fire for dropping the price of the iPhone. An immediate $100 money-back offer to all existing purchasers - something no other company has ever done before. A CE company give money back to its customers after it drops the price? Unprecedented! Can you imagine Microsoft or Nokia doing this? You discuss the “insistence” of Apple to impose revenue sharing arrangements as an example of this “hubris,” but frankly, I see carriers all over the world doing nothing but trying to outbid one another to attract Apple’s attention. Hardly a sign that Apple is indulging in hubris. Rather, it has devised a business model which whilst unorthodox is actually - it would seem - rather popular with many carriers.

I think Jobs has built admirable relationships. Witness many of the media companies with whom Apple has had no fall-out. Witness AT&T. Witness Best Buy. Amongst many others. What Jobs does is build relationships with companies who benefit Apple, and ruthlessly prune those who don’t. The company seems to build and maintain great relationships while that relationship remains in its interest. What is this - a business of a family?

Trade War? Pish posh. China and America need eachother like two drunks in the street propping one another up. There is and will be no trade war. These two nations are now so interdependent it defies belief. As the Chinese middle classes grow, what do you think they’ll be buying - iPod knock-offs or the real thing? C’mon! And where do you think all those iPods and Macs are made anyway? Yep, China. China benefits from Apple’s success enormously, and will do nothing to endanger that relationship.

Sorry for the harsh-sounding rebuttal, but really, I think you should have thought a bit harder before you clicked (though I appreciate you are raising potential red flags rather than actually positively identifying them as such). Thanks for the thought-provoking post though - you often manage to find interesting rocks on otherwise sandy beaches to look under, and it never hurts to know what might be lurking there

In contrast to some fine answers regarding AAPL and it products/management.

In contrast, I will try to approach this question from a macro and stock market investor angle.  My concerns for AAPL into 2 camps (I want to stress this is NOT my base case but it does worry me). 

First, issues regarding the underlying company earnings growth.  Under this heading, my largest concerns are that AAPL is a consumer and US/Western Europe centric company.  Although some what insulated due to its up market/unique positioning, it is neither immune to the greater economic cycle nor is not buffered by the enterprise market.  Emerging markets are providing most of the global GDP growth and AAPL is not yet entrenched brand-wise so a developed market recession will impact its earnings. 

This brings me to my second point - Valuation. AAPL is a growth stock valued on aggressive forward earning/cash flow.  If there is sustained economic uncertainty, investors might either discount future earnings until they really materialize and/or simple refuse to pay the same multiple of earnings/cashflow. 

For example, say CY 2009 earnings are $6.  Who’s to say that the appropriate multiple is 35x or 25x?  If the consumer really slows down, would a 20x multiple be out of the question? 

Using the example of $6 earnings:

35x 2009 P/E => Target Price = 210
25x 2009 P/E => Target Price = 150
20x 2009 P/E => Target Price = 120

Therefore, AAPL stock price does not live in a bubble and I feel I know less and less about what is going on with the broader market.  To put in context, I think the US economy will muddle through a mid-cycle slow down lasting most of 2008 and apart from financials and certain consumer discretionary sectors the stock market will be just fine.  In fact, I am optimist for a 5-10% rally in the S&P going into year end.  However, I am, like the fed, unfortunately data dependent.

Just my 2 cents…

Corporate hubris.

I don’t think we need to worry about this subject. Apple is not a “sales guy strategy” company. Those where the days of Apple without Steve Jobs. That was the era of the “sales guy strategy”.

Today Apple is a hardcore Technology company. If you are a REAL tech company you have to be arrogant and always know better than the customer. It’s your job because customers (and most competitors) have no chance in knowing whats next and how it should be done. Real Tech companies are arrogant and always now better than you. Otherwise they will just become present-IBM’s or Dells. Apple has been leading this sector for many years. At least they, and especially Steve Jobs, do fully deserve full credit for having a superior total executive-strategy in most areas.

I do not worry the least about this subject. How many jaws dropped when the iPhone was introduced? It was he most mass-jaw-dropping event in decades. Did we see this coming ? Hell, no, we did not, - and neither did competitors

No one knows exactly how European laws will impact the exclusive carrier model Apple is trying to construct. However, some expect legal wrangling to be disruptive even if the consequences are unpredictable. A small sampling:

Yesterday Maria Bartiromo said (read?) something to the effect of, “...this may cause Apple to have to renegotiate its carrier relationships” or something similar.

From Financial Times :  “This is a calculated move by Vodafone to disrupt sales at a critical point in the sales cycle. We know from the US launch that the first six weeks were critical in driving up volumes, and this is creating just a little chaos at just that time,” Mr Wood said.

“It was always understood that Apple would eventually open out the iPhone to other networks further down the line,” said Carolina Milanesi, analyst at Gartner. “They could not continue the exclusivity route forever if they wanted to drive up volumes. This might just make them do it sooner than planned.”

TheStreet.com (I know, I know): “The looming threat to Apple, however, is that European Union regulators may take a closer look at the legality of Apple’s exclusivity deals if the German judge concludes that the T-Mobile arrangement is anticompetitive or somehow disadvantages consumers.

Such a scenario could cause Apple’s other exclusive arrangements to unravel, ending the fees it earns from carriers. That would leave Apple financially exposed to the same competitive forces that have driven down the average selling price for the world’s cell phone makers.”

As wheeles points out, there are outcomes that can be imagined in which Apple’s pain here is minimized. However, some portion of the deferred revenue sharing that many have baked in with projected unit sales may be at risk—even if it comes back to Apple via higher non-contract pricing or other means.

I am sorry, but I can’t add anything to what might have been an interesting thread but this: if I read the intentionally antagonistic, idiotic term “Jesus Phone”, I immediately discount anything the author has written previously in the article or post, stop reading, and move on. So far it has worked marvelously..haven’t missed one bit of critical information or good analysis.  Congrats on getting into Forbes lumi.

Off to stuff myself with Turkey and dressing, and show off the iPhone to any relatives who haven’t seen it yet.

Have a Happy Thanksgiving to those that celebrate it, and to those that don’t enjoy a wonderful day off from the market. 

[quote author=“lumi”]No one knows exactly how European laws will impact the exclusive carrier model Apple is trying to construct…As wheeles points out, there are outcomes that can be imagined in which Apple’s pain here is minimized. However, some portion of the deferred revenue sharing that many have baked in with projected unit sales may be at risk—even if it comes back to Apple via higher non-contract pricing or other means.

As I posted in another thread:

It doesn’t matter squat if Apple are forced into providing unlocked iPhones in some territories, providing that:

a) the price is high enough to compensate for the loss of subscriber revenue sharing (which at $1500 I think we all agree it does)

and/or

b) the phone is sold with a contract.

An 18/24 month contract is a contract is a contract. It doesn’t matter if the phone is unlocked because the contractual commitment is there for the duration of the contract, and thus the subscriber revenue sharing arrangements are safe.

People getting worried about this are not thinking this through: ultimately, if I buy a phone in France on Orange unlocked, or exercise my right to unlock it for free after the first 6 months, I have still entered into a 24-month contract to do so, and even if I never ever use my Orange SIM but instead use Vodafone, I am still going to be paying for my Orange contract for that 24 month period. And so Apple still gets paid.

So people please, stop worrying. Locked, or unlocked, net net its all the same to us In the end, the vast majority of customers will choose the easiest route to an iPhone, and that is simply to buy one with a contract from the partner network and all the free data and WiFi goodness which comes with it.

So please, stop the needless concern about this.

[quote author=“iBuyer”]For example, say CY 2009 earnings are $6.  Who’s to say that the appropriate multiple is 35x or 25x?  If the consumer really slows down, would a 20x multiple be out of the question? 

Using the example of $6 earnings:

35x 2009 P/E => Target Price = 210
25x 2009 P/E => Target Price = 150
20x 2009 P/E => Target Price = 120

The problem with your supposition is, of course, that it assumes $6 for CY09, whereas everyone except idiots like Toni Sacconaghi of Bernstein (he who said AAPL has no upside to $78 in 2007) knows its going to deliver $6 in 2008.

A stock deserves a multiple relative to its growth. If Apple stops delivering that growth, the multiple will come down and the stock will collapse, and the story will be at an end.

If AAPL continues to grow earnings (and lets not even get started on free cash flow) at 40-60% YoY, then at its current multiple, it is truly, historically, undervalued right now. I think you have to turn your argument on its head and instead (or at least also) ask: what if (as is likely) growth is maintained at this rate for the next few years, given the Mac’s surging success and the iPhone explosion world-wide? In that case we’re looking at $6 - 6.50 for 2008 and possibly $9-10 for 2009. That gives AAPL a pps of $300-350.

Chew on that for awhile. Just pointing out that multiples go up as well as down, but in the end, all that matters is growth - and global growth at that. Continued growth = a continuing rising pps. And most importantly, if this growth does continue, the stock is cheaper historically than at any time since it was in the $50s in 2006.

The best AAPL-rant, ever!

Why I’m All About Apple
posted on: November 22, 2007 | about stocks: AAPL  

Apple (AAPL) is trading at 164$ per share, $28 off their yearly high, and I want every share I can get going into the holiday season. About three months ago I made a life changing decision, the decision to purchase an iMAC desktop computer. 15 minutes later I was asking myself, “what took me so long?”.

Ahh the colors, the compatibility, the ease at which I maneuvered on my new computer. My initial impression was that the MAC offered the greatest operating system and computing unit I have ever experienced. Three months later, my MAC was my new prized possession, “My Baby”. I run to her in the morning and re-live the feelings of the first time I turned her, discovering to my delight that Mac has no start-up, no disks to download, no Internet to connect, nothing. Just take it out of the box, turn it on and you are ready to go. I plugged in my HP printer and voila, my Mac detected the printer and automatically set up to print. A far cry from the disk install of the same printer on my Sony (SNE) Vio, which took considerably more time then necessary.

I, like so many others, found it hard to leave the familiarity I developed with Microsoft (MSFT) OS. I heard Mac was great but I was a Microsoft guy. The truth is, I just didn’t know any better. With my Mac I have forgotten what a pop-up window looks like; a distant memory is the process of re-starting my frozen computer; forgotten was the need to install printers. Oh and where is the tower that comes with desktops? That’s right. The Mac contains the whole computer in the monitor. You mean no wires? No pop-ups? No viruses? No freezing? I am pleased to say, No Sir, none of that. Life is great!!!!

I can truly say I am saying goodbye to Microsoft forever. I was stuck in a prison of Microsoft Operating Systems and have been released. Mac delivers freedom, a breath of fresh air in a dark place. Now, armed with my iMac, Mac Book PRO (Laptop) and iPod, I am taking on the world. I truly cannot wait to see what is coming next. It’s like Steve Jobs is trapped in a prison as well, a prison of coolness causing him to create the most innovative, trendy products in the world. Meanwhile a good portion of the computing public remains trapped in Microsoft’s operating prison. Whether unwilling to admit it or not, consumers are slow to realize Mac computers and operating systems are leaps and bounds ahead of Microsoft products. I am not negative on Microsoft as a company, but as far as computers go, Mac is hands down a better product. When I go to work, I find myself depressed while working on their Microsoft or HP (HPQ) computers, thinking “why must the misery continue?” It is like a horrible nightmare.

Don’t believe me, go right now to the store, purchase a Mac and let me know in a half-hour what you think. I guarantee satisfaction.

An Apple Holiday

So today, I am buying a mother load of Apple stock trading at $164 per share, almost 30 points off their yearly high. Honestly, I wouldn’t care if AAPL was trading at the yearly high; I want in for the holiday season. I believe this holiday season is an “Apple Holiday”, a defining moment for the company.

Before I get into the fundamentals, let me just explain where I am coming from. Looking at my Christmas list today, I came to a strong conclusion: Apple products will be the most desirable gifts this holiday season. My Christmas List so far:

1) For me: iphone (I need this).

2) My amazing girlfriend: iPhone, Mac Book for law school.

3) Her mom, my mom and dad, my brother, and our sister in law: Touch screen iPod with wi-fi internet (5 Total).

4) My nephew: A Mac notebook for 3rd grade.

Then I thought of all the iPods I bought last year and how many I will buy this year. I believe I will end up purchasing close to ten iPods this holiday. I already own a ton of Apple products and year to year I am increasing how many I buy. Steve Jobs, Apple’s CEO said, “We’re looking forward to a strong December quarter as we enter the holiday season with Apple’s best products ever.”

I know others’ Christmas lists look similar to mine. Lets face it, Apple products are hot! Looking around all I see are iPods, iPhones and Mac books. Everywhere, passing kids going to school carrying different color notebooks, businessmen with their iPhones all having the Apple insignia. Apple products appear to be the in-style brand for young and old.

Moving into fundamentals I want to focus on Apple’s “6th fundamental: Innovation”. Not only are Apple products innovative from their TV commercials to the iPhone, Apple products revolutionize their industries. Apple didn’t create a phone; they revolutionized the phone industry and mobile internet. Apple didn’t create an mp3 player, they revolutionized the way we listen to, buy, and play music and movies. They continue to display the knack for this type of revolutionizing innovation.

iPod Nation

How was life without an iPod? I just can’t remember, nor do I want to. The ability to play any song, from any album I own, at any time with the easy swipe of a finger has changed my life forever. Could I ever go to the gym with out my iPod? Oh no. Could I imagine a day in my car with out my music? I don’t think so. This is a common theme for iPod owners. The music purchasing counterpart to the iPod (iTunes Music Store) is revolutionary on its own strengths. The ability to buy one or two songs instead of purchasing a whole album has changed the music industry forever. No longer will I be the victim of a record company, buying an album with two quality songs. I, the consumer, will choose the way I purchase music. iTunes hosts 6 million songs. Did I tell you they also host 550 TV series and 500 movies? Apple has sold 3 billion songs to date, 2 million movies and 100 million TV shows. Not only can I buy movies and music for my iPod, I can watch my favorite TV shows as well; simply amazing. Bravo, Steve, Bravo. Did you know Microsoft has an MP3 out as well? Yeah, not only is one out, but it’s the second model, as the first failed to materialize with consumers. I predict in two years Microsoft will no longer be in the portable mp3 business. Microsoft just cannot compete with the iPod’s popularity. Oh, and the new iPod is completely touch screen with built in wi-fi for free Internet access. So now, on your iPod, you can surf the web anywhere you want for free via wi-fi. Genius, Steve ,Genius.

iPhone Revolution

I presently own a Blackberry (RIMM) and compared to my friend’s iPhone, my Blackberry looks prehistoric. I am getting the iPhone for Christmas and the wait is brutal. I am falling right into Apple’s marketing strategy. “We can’t wait to get this revolutionary product into the hands of even more customers this holiday season”, said Jobs. Sign me up Steve! I believe Steve will get his product into significant new hands, and you are unwise to believe otherwise. The iPhone sold 1 million units 74 days after debuting. Since, Apple has reduced the price and is benefiting from huge sales overseas. When the next round of numbers come out on iPhone sales, there is no question they will report extraordinary sales. The iPhone is better then any other product on the market. The Internet is crisp and easy to steer. Not the slow limited Blackberry internet I am used to.

Apple’s new operation system, the “Leopard”, sold 2 million copies in the first weekend, showing the type of demand for new Apple products. The innvoation Apple continues to produce should keep them ahead of the curve for awhile.

Now, lets take a look at how Apple’s finaces are managed. How do Apple’s numbers hold up to their innovation? First, lets examine 4th quarter results ending September 29, 2007 leading into the holiday. Apple released results showing better quarterly growth then analyst expected, reporting revenue of $6.22 billion, compared to $4.84 billion in the year-ago quarter. Apple showed gross margins (gross margins are figured by dividing gross income into net sales; gross income is revenue remaining after subtracting cost of goods sold) of 33.6 percent, up from 29.2 percent in the year-ago quarter. The smart money considers increases in gross margins year over year as imperative to quality management. For the 4th quarter, Apple reported a net quarterly profit of $904 million vs. quarterly profit of $542 million the year-ago quarter. The Mac computer was the driving force bedhind the huge growth in sales. Apple moved 2,164,000 Mac computers, delivering 34% growth over the year-ago quarter and greater than the previous quarterly record for Mac shipments by 400,000. Obviously Apple is pleased with its increased market share in the personal computer market and is showing the abaility to increase their market share year over year.

Apple’s international exposure is interesting as well. If there is any further deterioration in the US economy, Apple’s overseas sales should help maintain their growth rates. Their overseas marketing campaign is working as international sales accounted for 40 percent of the 4th quarter’s revenue.

Let’s take closer look at the 2007 fiscal year and how the company has progressed since 2003. “We are very pleased to have generated over $24 billion in revenue and $3.5 billion in net income in fiscal 2007,” said Steve Jobs, Apple’s CEO. Of course Mr. Jobs is happy; Apple ended the fiscal 2007 year with $15.4 billion in cash and no debt.

Net sales (the top line, total revenue before expenses) have increased year over year since 2003 (I did not go back further then 2003). Net sales for 2007 were 24,006 up 24% from 19,315 in 2006. Net sales were 13,931 in 2005, up from 8,279 in 2004, following 6207 in 2003. Net sales have increased four-fold since 2003 and grew 4.7 billion in 2007 from 2006. Net income (the bottom line, what is left after subtracting expenses from revenue) has increased from 57 million in 2003 to 3,496 in 2007, more then a 600% increase.

Looking at Apple’s flagship product, the Mac computer, we see Apple is increasing their market share in the personal computer industry. Total Mac net sales were reported at 10,314, up 40% from 7,375 in 2006, following a 18% increase from 6,275 in 2005. The increasing sales percentages are very exciting and I expect sales of Mac to continue to grow. The 40% increase in computer sales is way above the industry average and Apple has room for growth here. Mac unit sales increased by 1.75 million units or 33% in 2007. In 2007, Apple sold 7,051 Mac units 33% increase from 5303 in 2006, following a 17% increase from 2005’s 4534 units sold. It is important for Mac unit sales to continue to increase and retain market share in the computer industry for long-term stock growth.

There is no reason to expect a slow-down this holiday season in Apple products. The iPhone sold 1,359 million units debuting in the second half of 2007. Net sales of music related products increased $611 million, or 32%, during 2007 vs. 2006 from increased iTunes store sales. Oppenheimer, Apple’s CFO, said: “Looking ahead to the first quarter of fiscal 2008, we expect revenue of about $9.2 billion and earnings per diluted share of about $1.42.” That is more then a 30% increase in revenue form the fourth quarter 2007 to the first quarter 2008. I presume they will beat that estimate. M

ake no mistake about it, Apple is on the move. They have a quality company with amazing management and a loyal fan base. Once you buy one Apple product you are sure to buy another; there are just no comparable products on the market. This holiday seems to be Apple’s holiday; maybe for Christmas you should treat your self to a stock position in Apple and profit with the company. I am buying AAPL for the short-term as the holiday season should create a tremendous quarter for Apple products. For the midterm I am buying because after the holiday I expect continued growth in market share for the Mac computer. For the long-term investor (5 years or more) this is the company I want to place my future on. I want to buy AAPL and tuck it away for my kids as I watch the most innovative company expand their business. With new iPods coming out every year and a new phone already in development, the company has a recipe to retain loyal consumers (count me) to continue to purchase their products.

The stock has been on the rise as the world starts to understand that Apple products are superior to those of competitors. Once the world finally realizes how superior Apple computers are, we will see even greater growth going forward. For all the Macs out there, Apple still holds a relatively small portion of the market share on personal computers, providing a basis for millions of customers. The iPod already the leader in the mp3 market but still has a large untapped resource of new mp3 customers.

The bottom line is that I want to own as much Apple stock and products as I can, and so should you. They create revolutionary lifestyle products for young and old, the cool and un-cool, with new business coming from new and old customers.

a) the price is high enough to compensate for the loss of subscriber revenue sharing (which at $1500 I think we all agree it does)

T, how much of this would go to AAPL? Regardless, I agree that most people won’t bother with this route due to steep price and limited functionality. But will EU laws establish a precedent that could be leveraged against Apple in future countries such as China?

Or will it be totally market dependent, meaning that it might come down to whether a competing Chinese carrier would break from Chinese precedent— CM CEO Wang Jianzhou: “We still think we can maintain the operator-centric model because we have the [350 million] customers” —and accept Apple’s revolutionary terms?

So please, stop the needless concern about this.

Thanks for your patience—guess I haven’t digested all of this as quickly as some. In spite of what I consider to be legitimate questions, my gut tells me that the iPhone user experience is so revolutionary—even at this early stage—that it will eventually trump anything that stands in the way of mass consumer desire to own it. Just trying to understand how any bumps might effect share price in the relative near term.