Sponsored By:

Can't Beat an iPod That Makes Phone Calls

October 22, 2007

By Ken Kam
moneycentral.msn.com

ChangeWave Investing Editor Tobin Smith came out this week with a new Strategy Lab journal declaring "I'm here to tell you why Apple (AAPL) is headed to $225."

In my recent journal on Apple, I took a look at whether Apple, which has doubled over the last year, has the potential to double again. To me, in the end, it came down to this question: Is the iPhone a cell phone that is also an iPod, or is it an iPod that is also a cell phone?

There are many smart, competitive cell phones, but the iPod is, hands down, the dominant music player.

Well, you can tell a lot more about what people are thinking by observing what they do, rather than listening to what they say.

The phone companies clearly don't think the iPhone should be compared with other smart phones. They have done deals with Apple that they would not have done with any other smart phone manufacturer.

Neither do the buyers. They are passing on the Motorola (MOT), Nokia (NOK) and Palm (PALM) smart phones, even though they are, because of wireless-carrier subsidies, much cheaper -- and sometimes even free.

Conclusion: The answer to the question I posed in the last article is that the iPhone is more properly thought of as an iPod that just happens to make calls.

moneycentral.msn.com