The Apple Investor: Apple Armed With More Patents Than Google And HTC

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AAPL Valuation Metrics
Apple traded in line with the NASDAQ yesterday with marginal gains, reaching another all-time high at $219.08 per share (19x FY10 EPS and 17x EV / TTMFCF). Potential upcoming catalysts include the iPad hitting stores in the US in early April as well as Australia and the UK later in the month; the March quarter earnings release; and the release of the next generation iPhone this summer.

Apple Armed With More Patents Than Google And HTC
Apple has significantly more patents in its arsenal than either Google or Nexus One maker HTC, Fortune’s Philip Elmer-DeWitt notes. Apple is suing HTC for violating some 20 patents, many in reference to Google’s Android operating system. Between 2004 and 2007, when Apple was preparing the iPhone, it filed 507 patents, while Google filed just 67, and HTC filed none according to a chart from Deutsche Bank’s Chris Whitmore. Clearly, filing for patents isn’t the same as being awarded a patent, but it certainly shows that Apple has been more aggressive in terms of investing and innovating in technology and in seeking patent credit for its work. Most important for Google and HTC, “they represent the ammunition each company’s lawyers will bring with them when the battle is joined.” We will see if they are actually defensible.

Flash Or No Flash? That Is The Question Facing Consumers
(Business Insider)
Apple unveiled the iPad through an advertisement at the Oscars on Sunday. Hewlett-Packard responded on Monday by introducing HP Slate…on the Internet. Outside of the discrepancy in sales and marketing budgets, the main difference between the two is that HP Slate runs Windows 7 and therefore supports Flash, enabling users to watch the large majority of video on the web. The iPad does not. The good news for Apple is that the iPad’s custom software kicks the pants off Windows 7 and enables touch-controlled games and applications. And you can buy it in just three weeks — who knows when the HP Slate will eventually hit the market. Not that Apple necessarily needs it because consumers will buy the iPad regardless, but at what point does the frustration overpower the greed and ego to where Adobe either has to fix security issues with Flash, or Apple has no choice but to support it to appease its user base?

Another Analyst Pounding The Table, Thinks iPad Content Revenue To Soar
(Apple Insider)
In a note out this morning, Apple analyst Brian Marshall with Broadpoint.AmTech believes that iPad content revenue (e-books, applications, newspapers, etc.) will equal 10% of total iPad hardware revenue by the end of the year and reach nearly 30% by next year. He believes “the iPad offers a rich media experience that will translate into a content-based recurring revenue stream over time.” He also increased his formal iPad unit estimate for CY10 to 4 million units, up from 2.2 million but said he could imagine the company shipping north of 7 million units this year “if the device lives up to its potential.” With that statement, he just got more aggressive than Morgan Stanley, which is estimating 6 million units and above Wall Street consensus of between 3-5 million units. Marshall also raised his CY10 earnings estimates to $12.75, above The Street at $12.14.

iPad Commercial Reveals E-Book Pricing As Expected
When the iPad commercial debuted during the Oscars, it’s doubtful average users noticed or even cared about the e-book pricing displayed for nanoseconds during the spot. The iBookstore is Apple’s entrance into the e-book market. Since the iPad was announced, publishers have used price negotiations with Apple to leverage Amazon into accepting higher prices for hardcover bestsellers on the Kindle. While Kindle bestsellers previously have sold for $9.99, Apple’s deal reportedly sets them slightly higher, between $12.99 and $14.99. Though Amazon initially resisted, the company was forced to reluctantly agree to the higher prices, which are expected to debut when the iPad launches. Who knows if these prices shown during the iPad commercial are real or if they are simply plugs, but for what it’s worth, it seems that e-books are going to run between $7.99 – $14.99.

The iPad Won’t Destroy Other E-Readers, Says Other E-Reader Chip Provider
(ZD Net)
The iPad won’t cannibalise sales of e-readers, according to Freescale Semiconductor, provider of chips for both Amazon’s Kindle and Sony’s Reader. In an interview with Glen Burchers, consumer marketing director at Freescale, he sites expansion of the overall e-book market, the higher average age of the e-book demographic, and, most important, price as the backbone of his thesis. Yes, the e-book market is expanding and there is no doubt room for a few major players. Yes, the average age for an e-book user is higher than, say, the iPod. But shouldn’t Amazon and Sony be targeting a younger market to avoid dying off? That is part of Facebook’s success; going after teenagers first and growing with the user base. Price we agree on: Apple must drop the price of the iPad to be competitive and command main stream adoption. Freescale is making that more difficult, as the next generation chip can bring down the price of an average e-reader by $30.

UK iPad Launch Delayed, Will Work With More Than One Carrier Out Of The Gate
(Times Online)
Apple has delayed the iPad launch in the UK as both models (Wi-Fi and 3G) won’t be available until late April. Negotiations are rumoured to be taking place throughout the week. Unlike in 2007 when Apple selected O2 as the unique provider of wireless services for its iPhone, Apple is not expected to choose a single carrier for service in the UK this time around. The most obvious and widely recognised reason not to tie the iPad to a single carrier in the UK is that iPhone customers use up 3x more data than other mobile-phone users, which constrained O2’s network and led Apple to expand carriers (Vodafone and Orange). While not likely material at this point in the game, just to put sales into perspective, Europe represented 32% of Apple’s total revenue last quarter.

The Apple Investor
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