Apple Primed for iPhone Song-and-Dance Extravaganza

Photos around the Web have already revealed the banners gracing the walls at the Moscone Convention Center in San Francisco. On them are the letters "WWDC" and the legend "One Year Later, Light-Years Ahead." Both the letters and the words are surrounded by a blizzard of Apple (Nasdaq: AAPL) App Store icons.

"WWDC," of course, means next week's Worldwide Developers Conference, Apple's annual mid-year show-and-tell for its third-party ecosystem partners. The icons help underscore the company's strategy as it gets ready to fend off new big-name competitors to the iPhone and maintain interest in its Snow Leopard desktop operating system update. The message: It's all about the software, despite any hardware announcements that may be forthcoming.

As if the Apple faithful needed any more reason to check out Monday's live-blogging action from San Francisco, The Wall Street Journal has reported that Apple CEO Steve Jobs, who's been on semi-hiatus since last winter to deal with ongoing health issues, is on schedule to return to executive duty at the end of June. Could Jobs make a cameo appearance on stage Monday?

"I don't think we'll see it, and I don't think he needs to do that," Ben Bajarin, director of Creative Strategies' consumer technology practice, told MacNewsWorld. "He's on track to come back, and [Apple] may plan an event around that. Knowing how Apple has handled things before, they don't want to stray from their core strategy. He's said when he'll come back -- and to some degree, that's the right decision. It should be a 'welcome back Steve' event."

A Jobs wave to the crowd from the Moscone stage may indeed send a thrill through the audience, galvanize investors and shareholders, and command media attention for a day, but it could also overshadow the product messages that Apple hopes to get across next week, Bajarin added.

The WWDC iPhone Theme

That banner hanging from the Moscone Center wall -- and its swirling App Store icons -- says everything about what Apple needs to spotlight to the world on Monday: The iPhone may represent the first true mobile Internet device.

"The nexus of their power is the totality of that -- not just that they have a great platform, but that there are all these rich applications that go on that platform," Endpoint Technologies Associates President Roger Kay told MacNewsWorld.

"What companies like Google (Nasdaq: GOOG) and Apple understand is that what you connect to is just as important as what you use to connect with," he said. "That's the definition of an 'ecosystem.' It's what Microsoft (Nasdaq: MSFT) did with the PC: the base thing -- Windows -- that makes it run, and the useful things you do in an office -- Office, Excel, Outlook -- that go on top of that. The iPhone is also very powerful in that way."

Apple has managed to lower expectations about WWDC somewhat, said Kay, but it's made it clear that the show will revolve around the iPhone -- though not necessarily the hardware. "You may get a peek at the new phone. It's not going to look that different. There might be some little design touches. Typically, Apple makes some design distinctions so you can be envious of the people with the new one. But barring that, it's mostly about software."

The time has come for Apple to start further segmenting the iPhone by price category, in the opinion of Kevin Burden, smartphone research director for ABI Research. That may mean a US$99 dollar version with touchscreen, App Store access, and less built-in memory -- but with an expansion slot.

"I think all signs do point that we'll see a new iPhone, even more of a mainstream-type device with a lower price," Burden told MacNewsWorld. "The idea is to continue to push for an iPhone as a mainstream device. There's a mass of users out there that are in the market for a new mobile phone, but not necessarily a high-level, software-heavy smartphone."

If Apple can offer the core features of an iPhone at a lower price, the company can take some of the steam out of Saturday's Palm (Nasdaq: PALM) Pre launch. In fact, what happens on the WWDC stage may be predicated by the expectations for what Palm, the Android platform and Research In Motion (Nasdaq: RIMM) have in store for the summer in terms of hardware, software and services.

"I don't think [Apple] will allow a conference to go by without having the ability to trump what Palm is going to do, and there's the issue around Android," Burden said. "The word is, we'll see several different Android models before the end of this year. Apple could lose some of its market share if Android takes off the way some people expect it to."

That's especially true if Android phones are priced more economically than the iPhone, Burden added.

Keep the Developers Happy

The same "it's the software, stupid" strategy also applies to Mac OS X 10.6, aka "Snow Leopard," Bajarin said.

"What they'll do is demonstrate the new features of Snow Leopard and the core operating system kernel," he predicted, "that will continue to give developers more tools and a more innovative platform that will run great software. They need to tell consumers that this is the latest and greatest operating system. They did that with all the last few versions by adding things like Spotlight and Time Machine."

Expect to see more visual technologies demonstrated through Snow Leopard that play into Apple's long-held belief that rich graphical user interfaces separate them from the OS pack, said ABI Research's Burden. That would give developers time to work their magic for expected updates later in the year for new MacBooks or iMacs.

"They need to continue to demonstrate how they are innovating with hardware and software," Creative Strategies' Bajarin suggested. "The key is, they need to reinforce the message of the strength of the Mac, the assets of the iPhone and Mac hardware, so software developers can keep taking advantage."

The possibilities for video-editing software and a video camera for the iPhone would help cement the consumer base that wants to share (and overshare) via social networks and user-generated software. However, both Endpoint Technologies' Kay and Burden believe that background processing improvements for iPhone OS 3.0 -- better battery management to allow running more than one app at a time -- would open up more enterprise use for the smartphone.

"The Palm Pre doesn't seem to have those problems," observed Burden. "Enterprises have a lot of interest in the iPhone, but it's executive candy right now."