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When Google’s first cell phone ambitions started to fuel public conversation, the mysterious G-phone was a myth as exotic as an udumbara flower and as circulated as a chain email.  In November 2007, Google settled the mystery by revealing their plans for Android, a linux based, open-source mobile O.S. platform.  Now, there’s a tentative debut deadline for the first Android enabled phone.  It will be here by November 10th at the latest, possibly earlier.

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Apple and retailer Best Buy got cozy with a “store within a store” pilot project a couple years ago.  After a successful test, the pilot became a full-fledged roll out.  Last week,  Best Buy finished another project: a long effort to upgrade its cell phone sales department. (Best Buy Mobile shops are a a joint venture with Britain’s Carphone Warehouse). Putting the Apple and Phone upgrades together, Best Buy selling the iPhone would seem a natural fit.  That’s exactly what was announced Wednesday.

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Yesterday’s “Applevine” post on Metue summarized some of the current Apple reports and rumors circling the news world.  One of the elements included was a recap, and light review, of newly reported data on how the new iPhone supporting “App Store” is doing.   The numbers were impressive and there is clearly great potential but the take here was cautionary; a bias toward pragmatism with predictions.  One month seems too slight a sample to use for accurately forecasting revenue growth or impact on EPS.  A few raised flags of dissent. 

One comment speculatively said the store could be a 80 to 85 percent gross margin business.  Another said that the store could add as much as ten or twenty cents to quarterly earnings per share.  Those numbers weren’t supported.  They were just “pie in the sky claims,” but still they are out there and they beg a question: what’s the App Store potentially worth – not qualitatively, not from a behavioral analysis, not from a zealous Apple fan, nor from a detractor – simply by the numbers.  If we set aside the opinion that one month of data is too little to be meaningful and use it anyway, if we break out the Graham & Dodd, fire up the spreadsheets, how much of a contribution could the App Store make to Apple’s bottom line if the current levels are annualized?  It’s got a great revenue story but how much for earnings?

How much might the App Store contribute to earnings per share if the store’s revenue grows to $500m, or passes $1 Billion? 

What might it mean to Apple shareholders on a standalone basis that disregards the store’s greater contribution as a driver of iPhone (and iPod Touch) sales?

There’s no easy answers, but in this post we’re going to try and set out a framework for looking at it – a way of adding numbers to wild speculation. 

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In politics, or even for the reign of a new CEO, one hundred and eighty days are the usual benchmark for the first measurements of achievement.  In the consumer electronics world, with the instant gratification generation of the Internet driving things, the pace is far quicker.  It’s been only a month since Apple unveiled the iPhone 3G to the world but measurements are flowing.  And like a blockbuster movie touting weekend box office tallies to sustain momentum, Apple too is shrewdly using the press to maintain and build buzz for the phone.

Today, Apple announced that more than 60 million applications have been downloaded at the new “Appstore.”  Click to Read More

Apple’s iPhone is on sale in 23 countries.  In the first 72 hours more than one million units sold.  August 22n  around twenty more countries are expected to come online.   

So the question is: how many units does Apple need to manufacture to keep ahead of demand and to satisfy a three to six week channel inventory need?

The initial reports, and early analyst expectations, seemed to set the answer at about 25 million units.  A report from tech blog, Tech Crunch, speculated Monday the number could be much higher.

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The iPhone is here and Apple is making headlines around the world.  From the Applevine, there is more going on than just the debut of the anticipated phone. Thursday, it became apparent that the company is off the hook for any backdating of stock options.  Also, the iPhone 3G was cracked open and the App store went live.

Backdating Investigation Closed
While spokespeople for Apple and the San Francisco U.S. Attorney’s office have not commented, after two years, it appears the Justice Department has ended its criminal investigation of stock options back dating at Apple. They decided no charges will be filed.  Sources close to the case told the Wall Street Journal the inquiry is over.

At issue were practices dating back to the period between 1997 and 2001.

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With iTunes, buying music has always been easy.  Apple insured that with a clear pricing structure.  They enforced it through aggressive negotiations with music labels and video producers.  Buying the new iPhone won’t quite be as easy.  The 3G phone is due in a blink, 8am on July 11th.  In anticipation, global carrier partners have been rapidly revealing their pricing plans and service agreement requirements.  While the 8Gb model is likely to stay near the projected maximum unit price of $199 as Steve Jobs promised in his Developers Conference Keynote, service offerings and subsidies are set to vary widely.  The details will be in the fine print.

A QUICK GLOBAL SURVEY OF CARRIER PLANS

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