The Apple World Wide Developer Conference (WWDC) kicked off Monday in San Francisco, and the sheer amount of innovation revealed so far is enough to impress even the most jaded techie. Announcements during the conference included revelations about high-definition screens, an upgrade to its mobile operating system and a larger screen for the iPhone. New developments signal cooperation with Facebook but a freeze-out of rival Google. Meanwhile, the stock market was oddly quiet with final numbers that did not seem to reflect the marketing surge extolled by Apple on the opening day of the conference.
It’s all about the apps
The Apple WWDC is Apple’s annual event where it unveils new technologies to inspire developers to create applications that will satisfy users and attract new converts. In fact, leadership in the industry depends largely on a company’s ability to persuade developers to focus their creative energies on new tools and games for its platform. So far, Apple leads the pack in number and quality of apps for its devices while Microsoft and Google follow behind.
In March 2012, Nielsen reported that just under half of U.S. mobile phone subscribers own Smartphones, with Android devices taking the lead at 48 percent, while Apple iPhones trail at 32.1 percent. Those percentages may change, however, in light of developers’ preferences for creating apps for particular operating systems. Nick Wingfield and Brian X. Chen explained how development of apps may be a game-changer for the popularity of the iPhone in their June 11, 2012 article for the International Herald Tribune titled, “Apple leads with apps in race for top smartphone ; Developers find it easier to create software for iOS than for Android devices.” Why are apps so important to Smartphone and tablet makers like Apple and Google? According to Wingfield and Chen it’s because apps have become the “strongest weapon” in their marketing efforts of mobile technologies. Although Google’s Android phones outnumber iPhones in the marketplace, developers are more likely to find it easier to develop for the Apple devices and their consistent platform on both phone and tablet. In contrast, the open nature of the Android platform means that there are more models in use each with its own screen size and processor. Wingfield and Chen added, “Furthermore, Apple has been far more effective in getting iPhone users to update their phones with the latest version of iOS than Google and its partners have with Android. This makes it easier for iPhone developers to write their apps, because there is less variation in the underlying software on the devices.”
While Apple plans for deeper integration with Facebook by incorporating Facebook events and apps for photos, it seems clear that Apple has placed competitor Google squarely in its crosshairs. In addition to new uses for its voice-recognition technology, Siri, Apple announced that they will no longer be integrating Google Maps. Adam Satariano detailed Apple’s strategy in his June 11, 2012 article for Bloomberg.com titled, “Apple Combats Google-Microsoft-Facebook Troika in App Race: Tech.” “The change may help shunt advertising revenue toward Apple and away from Google, said Forrester’s Golvin. Apple also is adding Baidu Inc.’s search engine as an alternative to Google for iPhone users in China, people said last week. The changes highlight Apple’s growing rivalry with Google, which has joined companies including Samsung Electronics Co. to challenge the iPhone and iPad,” Satariano said.
Despite the wave of innovation revealed at the WWDC, Apple stock continues to be undervalued by investors. Second quarter earnings of $11.6 billion outstripped those of Facebook by more than three times over yet the stock price has hardly quivered. Apple’s price-earnings ratio (P/E) is a mere 14 compared to Facebook’s P/E that is currently floating around 83. Why the disconnect? Some experts believe that it’s the loss of Steve Jobs, Apple’s founder and guiding force. Will Apple stock ever rise to reflect the company’s profitability? Nancy Miller addressed this question in her May 29, 2012 article for Time.com titled, “Why Doesn’t Apple Get More Respect In the Stock Market?” Miller found that another reason lies in disparate views as to whether Apple is a hardware company or a software company. “There are also some technical reasons to doubt that Apple’s valuation will double. Rand’s Todd Sullivan says when a stock price reaches a certain absolute level — Apple currently trades around $560 — investors hesitate to push it up much higher. In his view, Apple is unlikely ever to trade higher than a P/E ratio of 20,” Miller concluded.
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