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iPhone Prepares for Launch

Having achieved dominance in the online-music sector and rejuvenated its corporate fortunes with the iPod, Apple Inc. (Nasdaq: AAPL) is poised to do the same in personal communications with its own smartphone, already dubbed the "iPhone."

Online rumors of the iPhone have surged several times over the last couple of years, and they're doing so again today thanks to a report by American Technology Research co-director of research Albert Lin.

"The kinks have been worked out of the new phone and ... it is set for production," Lin writes. He says the design will be an "iPod nano-like candy bar form factor and come in three colors." (Ed. Note: White, black, and ... ?)

"We believe this smartphone has been in development for over 12 months and has overcome substantial challenges including design, interference, battery life, and other technical glitches," Lin continues, without detailing the sources of his information. "As we have seen in the smartphone space, it is very difficult to produce a converged product of high quality."

What Lin means by a "smartphone" is not entirely clear. But even a small slice of the cellphone market would be a huge win for Apple: A phone capturing just 1 percent of the global mobile phone market would sell 10 million units a year. At $200 apiece, a conservative estimate for typically pricey Apple devices, that would contribute $2 billion in annual revenue to Apple's bottom line.

Apple has scheduled a splashy event at the Yerba Buena Center for the Arts Theater in San Francisco next week to introduce its new digital media strategy. To be debuted at the event, according to AppleInsider, are a new 23-inch iMac, a widescreen video iPod, an iTunes movie offering, and "one more thing."

If the "one more thing" is an iPhone, that could mean the new mobile device will be in stores in time for the holiday season. Predicting a hit, Lin has raised his price target for Apple shares to $91 from $75. Apple's stock enjoyed a healthy run yesterday on news of Lin's prediction, and closed at $70.04 today.

At a minimum, an iPhone would be expected to include iPod capability, calendar and contacts applications, Web access, a camera, and some form of mobile email client in addition to conventional cellular voice service. That list leaves open some important questions, such as: What operating system would an iPhone run on? Would it synch with Microsoft Corp. (Nasdaq: MSFT)'s Outlook program? Which carrier(s) would offer service on the device? And what type of mobile email platform would the iPhone carry?

An acute analysis by Alfredo Padilla last month, on mobile device site the::unwired, examined these questions in some depth and reached a fascinating conclusion: The most likely candidate for an extensible OS for the iPhone would be Symbian Ltd.

"There are some very interesting possibilities in an Apple/Symbian partnership," Padilla wrote. "First, there are complementary opportunities. Symbian controls an overwhelming majority of the global smartphone market, and an alliance with an Apple iPhone would probably cement their dominance. The one major area where Symbian does not do as well is in North America, where Apple's name recognition could quickly vault them past Palm and Windows Mobile. Finally, Symbian's extremely flexible framework would allow Apple to create the look and feel they want, while at the same time retaining access to the large collection of third party apps available."

Given the London-based OS developer is already rumored to be the platform of choice for RIM, once its in-house BlackBerry OS exhausts its natural lifespan, the Apple smartphone debut could be a powerful springboard for Symbian. (See RIM to Go Symbian?)

Apple spokesperson Tom Neumayr declined to answer questions about the purported iPhone launch, saying, "We do not comment on rumors and speculation."

— Richard Martin, Senior Editor, Unstrung

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