PREVIEW-New Apple iPhone on tap but may fail to dazzle

(Repeats story originally issued June 3)

* Europe, Asia key to sustained growth

* Android emerges as chief iPhone rival

* Price strategy important; Verizon iPhone not expected

By Gabriel Madway

SAN FRANCISCO, June 3 (BestGrowthStock) – Apple Inc (Read more about Apple stock future.)’s (AAPL.O: )
next-generation iPhone, which CEO Steve Jobs is widely expected
to unveil on Monday, will have to really set new standards in
multimedia content and function to wow Wall Street and
consumers.

Apple’s challenge may be to dream up game-changing
innovations, since the iPhone is already an unqualified
blockbuster that is the company’s main profit growth driver,
and its share price hovers near record highs. The bid is made
tougher with the early success of the iPad tablet computer,
which many say has already created a new market.

Competition from a host of well-received smartphones based
on Google Inc (Read more about Google Stock Analysis)’s (GOOG.O: ) Android operating system is also
growing, pressuring Apple to raise the bar even higher.

The “iPhone 4.0 will keep them ahead of the game. Is it as
easy as last year to stay ahead? No. I think Android has made
huge progress,” said Gartner analyst Carolina Milanesi.

Only last year, Research in Motion Ltd (RIM.TO: ) was seen as
Apple’s top rival. While the company’s Blackberry remains the
smartphone of choice for many corporations, Apple has made
strides in that market as security concerns addressed by the
Blackberry have eased. [ID:nTOE64G06A]

More than 70 percent of Fortune 100 companies have deployed
or piloted the iPhone, according to Apple.

But the iPhone’s prime target — for now — remains the
consumer, in a market where it increasingly goes head-to-head
with Android phones from vendors like HTC (2498.TW: ), Motorola
Inc (MOT.N: ) and Samsung Electronics (005930.KS: ).

Longer-term, investors are squarely focused on the iPhone’s
spread into international markets including China, Apple’s
pricing strategy, and when the device will be available through
another U.S. carrier besides AT&T (T.N: ).

Jobs takes the stage at Apple’s developers conference in
San Francisco on Monday following a hectic public schedule of
late, where Wall Street is expecting to get its first formal
look at the fourth-generation iPhone.

The phone will likely be faster, have more capacity, a
better screen and battery life, and a front-facing camera —
all nice additions, but none of which move the competitive
needle very much.

“There will be some pretty cool things on stage with Steve,
but at the end of the day we know the general functionality,”
said Broadpoint AmTech analyst Brian Marshall.

Some features that iPhone users have long clamored for,
such as multi-tasking, will also be added.

GROWING COMPETITION

The iPhone, introduced in 2007, arguably created the modern
smartphone industry. The template pioneered by the iPhone — a
roughly 4-inch slab with a touchscreen interface offering quick
access to thousands of applications — has become the standard
for Web-surfing handsets.

But the market has since grown thick with competitors,
particularly slick smartphones based on Android.

“Android is the only real contender to the throne,” said
Rodman & Renshaw analyst Ashok Kumar.

“Nokia’s (NOK1V.HE: ) position continues to fade, RIM has yet
to make traction on the consumer side, and Microsoft (MSFT.O: )
could end up being too little, too late.”

Nokia’s Symbian mobile operating system is the global
market leader and RIM’s platform is No. 2, but both are losing
market share, according to Gartner data.

The iPhone’s global share surged to more than 15 percent in
the first quarter, making it No. 3. Android was No. 4 with
close to 10 percent of the market, a huge increase from the
previous year and gaining, Gartner data show.

Milanesi said the iPhone has done well internationally,
particularly in Europe, but still has plenty of room to grow in
Asia, where competition is fierce and smartphone preferences
can vary widely from market to market.

The iPhone is available in around 90 countries and on more
than 150 carriers. Apple sold a record 8.75 million iPhones in
its latest quarter. That accounted for 40 percent of revenue,
with margins estimated at roughly 60 percent.

Many on Wall Street expect the iPhone to arrive at Verizon
no later than 2011, and perhaps as early as this fall. Apple is
not expected to announce a Verizon iPhone on Monday.

AT&T has come under withering criticism from iPhone users
over its network quality, although Jobs said this week he
expects to see improvement this summer. [ID:nN01263376]

AT&T said Wednesday it will stop offering an unlimited
pricing plan for new subscribers to its mobile data services,
which could help improve the speed of its network in some areas
by cutting down on network-clogging downloads. [ID:nN02173229]

Piper Jaffray analyst Christopher Larsen said the timing of
that announcement, days before Apple’s event, was no
coincidence. It could help the carrier keep its exclusive
iPhone deal for longer.

How Apple chooses to price its newest iPhone, as well as
the older models, will be closely watched, given Apple’s
enviable margin profile. The latest model iPhone, the 3GS,
starts at $199 with an AT&T subsidy, with the older model 3G
priced at $99.

Many doubt there will be any surprise announcements on
Monday, but with Apple one never knows. The rumors include a
Web-based version of iTunes, and a new version of Apple TV.

Investing Analysis

(Editing by Edwin Chan and Richard Chang)

PREVIEW-New Apple iPhone on tap but may fail to dazzle