AAPL‘s holds its annual World Wide Developers Conference today. Last week they announced that Steve Jobs will give the keynote and that they will announce iCloud service. This morning in a note to clients JP Morgan previewed what to expect from AAPL’s dream in the cloud:
Get ready for iCloud. At WWDC 2011, we expect Apple to unveil its iCloud
service with much greater support from the content providers, i.e., the music,
film, and TV houses. We think that this competitive advantage will help Apple
separate its cloud offering from the pack when compared to nascent offerings
from Amazon and Google. While details on iCloud are limited, we expect the
service to build off of Apple’s MobileMe platform, which provides email and
remote storage for users who pay $100 per year. With iCloud, it has become
consensus that content purchased via iTunes can be streamed to a user’s devices without having to first sync. We agree with this view.
iCloud stands to disrupt how users view storage. In our view, Apple started
preparing the consumer for the streaming experience with last year’s overhaul of Apple TV. The device no longer houses a disk drive, requiring the user to rely
on streaming from iTunes. This approach has prepared users for a cloud world,
whereby the user does not need to possess/manage all of the data locally. We
think that the next off-shoot will be that future PC offerings will rely more on
SSDs, not HDDs. So much of internal storage in PCs supports music, video, and
photo content. If iCloud serves as primary storage for this data, then the PC’s
internal storage will not require as much capacity, particularly in notebook PCs.
MY TAKE: I first I will start with a few questions…….
1) When not on wifi, how the heck does AAPL expect content to be streamed to iPhones when AT&T’s wireless service can barely keep from dropping calls?
2) AAPL TV, hmmm, I thought Steve Jobs referred to this as a hobby a few years ago? Well in my opinion from extensive use of every iteration of the product, they have treated it like my daughter treats her “hobby” of playing piano…she only works at it when she is forced to…..the product that they started with that had a hard drive was actually much better than the latest version, as you could sync content and not rely on streaming……the streaming of content is still a challenge with lots of disruptions and AAPL customer service blames it on a whole host of things, like your wireless service or your modem….sound familiar AT&T iPhone users?
3) MobileMe…also a hobby, I have used this service from it’s inception and paid $100 a year for it, generally it is ok, the only reason I pay for it is so my calendar and address sync with the web and my iPhone….but many people that I know, including myself have had a spotty experience with it and have info wiped all together on numerous occasions….
OK ENOUGH WITH ALL THE WHINING…..and you may ask if I am so unhappy with these products then why still use them and pay for them? ….well the simple answer is I have been conditioned not to use my iPhone for important phone calls, it is a very cool iPod that can make calls if necessary….and the APPLE TV I barely use cause it kind of sucks and the MobileMe I keep because of the promise that one day it will work as it should…..
AAPL’s announcements today will be focused on software for Macs and cloud, this is not what the media and investors have become accustomed to at this event in the last few years…..I believe that even though the press, Wall Street analysts and most AAPL fan-boys will be all geeked up as usual following the event, investors will be disappointed and the stock is likely to sell off over the near term. The only thing that would change this would be some road-map for iPhone and possibly the intro of a lower end iPhone to bring it to the masses….But this is not how AAPL operates……
I have suggested a few different trade structures of late and have traded some myself…..At this moment iLike to use weekly options to play today’s event……Want to risk a little to make a lot if stock does what I think it will do….the one thing I worry about is that the stock hasn’t rallied into the event as it usually has done, so any unexpected (real) product news, and the stock could pop.
TRADE: AAPL (~$346) Buy the June10 weekly335 Put for 1.05
Break-Even on June10 weekly Expiration:
Upside: above 336.05 lose 1.05, bwtn 335 and 335.05 lose up to 1.05
Downside: below 334.95 have unlimited gains to zero.
–If stock sells off after announcement look to turn into a put spread and lock in gains….