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This is Apple ... Hold Please

This is Apple ... Hold Please

by , 12:30 PM EST, December 26th, 2006

Apple has remained silent about a cell phone. Some people are wondering if this is the right time to buy Apple stock, or defer. And if Apple does ship a phone, people are wondering how it will fit into the existing structure of the cell phone business. These were the issues brought up in a Wall Street Journal article Friday. [Subscription required.]

All of Apple's issues were laid out. Will an Apple cell phone with music capability cannibalize iPod sales? Next, Apple's stock is already considered overvalued by some. Buying now could be a risk if the Apple cell phone disappoints. However, the article also proposed that Apple has a huge opportunity. Six million cell phones sold in 2007 and 12 million in 2009 would generate an estimated US$5.41B in revenue.

There are other considerations cited: "Apple would have to take on the responsibilities of ... billing and customer service." Also, Apple's iPod business model conflicts the the current system of virtually giving away hardware and charging for services. Disney's own cell phone service failed when Disney's customers were luke warm to the services offered.

Apple is faced with a delicate balancing act. Apple's investors and analysts are uncertain about Apple's business model and the direction of the technology. There are many opportunities to go wrong. How Apple wades through all these perils has everybody watching.


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