iDay Is Here!

The iPhone goes on sale today. Now we will see if Apple's manufacturing, distribution and quality control are as good as its design and promotion capabilities.

Will the iPhone be another iPod? Or will it be a Newton or a Zune?

Tomorrow and for the foreseeable future, the news will be all about the SNAFUs and problems that happen with iPhone and about how customers have been disappointed. The story will no longer be about what an amazing thing that Steve Jobs has wrought. Among stock traders, there is a saying; "Buy on rumor, sell on fact." According to this wisdom, if the word on the street is that XYZ Corp. is going to be acquired, you ought to buy XYZ Corp. stock. When the deal is announced, sell it. If you followed this wisdom, you bought AAPL stock in early January when the iPhone was rumored and you sell it today. If you did that, you paid about $85 per share and right now you can sell for about $122 per share. That is a gain of 44% over 6 months. Not bad.

And what about AT&T which provides phone service for the iPhone? This is not Alexander Graham Bell's AT&T. It is the bastard child of Wall Street, having been cobbled together after the telecom bust. The powers that be at AT&T know all about junk bonds, leveraged buyouts and corporate restructuring (AKA layoffs). They know how to play hardball. It remains to be seen if they can work with Apple and provide the technology, customer service and innovation that iPhone customers will expect.

I own a few shares of AAPL. But I am not selling today or any time soon. I didn't buy the stock because of the iPhone. I didn't buy it because of the iPod or the iMac either. The iPod is an attractive business because of its market share. The iMac certainly has its partisans, but I would not be surprised to see it sold to Lenovo before long.

The reason why I like Apple's stock over the long term is iTunes. What I like about iTunes is that it has a dominant position in the digital music business. The digital music business has "increasing returns to scale," and I believe that Apple can parlay this position in digital music into a dominant position in online movies and television shows. This means lots of upside for Apple and its shareholders, including me.

Recommendation: Macintosh

I used to be an Apple computer user and a Macintosh man. But, I haven't had one for many years.

For a long while I avoided Macs because I thought that Apple was going to disappear, like hundreds of other computer manufacturers have. I was afraid I'd be stuck with orphan technology, and I'd lose my work and my data.

With the success of the iPod, Apple's future is secure for the time being. Now, I'm thinking that Apple will abandon Macs and focus instead on iPods, iPhones, Apple TV, et al. But Mac PCs have become more like their competitors over the years, and there would probably not be any difficulty migrating work and data files to another platform. So that's no reason not to buy a Mac now.

Historically, Macs were significantly more expensive than Windows PCs. However, Mac users reportedly have fewer problems than Windows owners. So, from a total- cost- of- ownership perspective, Macs are probably cheaper than Windows PCs, even if they are more expensive out of the box.

The main reason that people have fewer problems with Macs is that there are fewer hardware and software choices available for Macs than there are for Windows PCs. Less crap installed and connected to the Mac equals fewer problems. Unfortunately for Apple, many people like me want all that crap. If you are satisfied with the crap that you can get for a Mac, then a Mac may be right for you.

Macs have long been fashionable and hip in certain circles. I do not travel in those circles. I thought the iMacs were pretty when they came out, but the idea of a monitor married to a CPU never appealed to me. If the look and feel of a Mac appeals to you, go for it.

Because of increasing returns to scale, Microsoft was able to corner its market and act in a predatory and monopolistic fashion, without proper regard for the interests of its customers. Now Apple has had similar success in the online music market. It is likely that Apple will be demonized as a monopolist one day, tarnishing the holier- than- thou image it has today in some quarters. But again, that is no reason not to buy a Mac today.

If you are looking to buy a PC for the office, and your company is a Windows shop, as most companies are, then you are probably better off getting a Windows PC at work. You probably don't have any choice in the matter.

If you want to buy a computer for yourself or someone in your family, then you should consider a Mac. Does it have the software, games and peripherals you want/need? When something goes wrong, will you be able to get support somewhere? Given the "right" answers to these questions, I recommend that you get a Mac.