That’s the theory put forth today by Bernstein analyst Toni Sacconaghi, who believes Apple’s market-share aspirations for the iPhone are a lot like those for its iPod business. Sacconaghi sees an iPhone Nano or Mini as an inevitability, one that would dramatically expand Apple’s addressable market.

“We are surprised that Apple hasn’t moved sooner to introduce a lower priced offering that could help secure a more dominant installed base,” Sacconaghi said in a note to clients today. “After all, the smartphone world is a platform war, where first mover advantage and scale matters. The dual facts that (1) iPhone has not been available at several very important global carriers and that (2) it carries a very high price point have contributed to creating an opportunity for Android that has been successfully exploited. Particularly with Android now outselling iOS, the imperative for Apple to expand its installed base has never been higher.”

A scaled-down version of the iPhone with a cheaper data plan–or one that required no data plan at all–is one very obvious way of doing that. Roll out a device like that with a street price that falls somewhere between $149 and $199, says Sacconaghi, bring it those carriers that don’t yet offer the iPhone, and mass-market adoption will follow. Serious mass-market adoption.

“It is difficult to estimate the size of a market for a product that we don’t yet know the form-factor or timing for. But as a rough guide, we estimate that at an end-user price of $150-$200 and no data plan contract, Apple could address potentially all of the remaining smartphone segment, the non-smartphone postpaid segment, and about 15 percent of the non-smartphone prepaid segment. This would amount to an incremental 700M+ units and $90 billion in revenue in terms of market opportunity; even if Apple succeeded in capturing just 5 percent of these incremental units, it would add $12+ billion in revenues and $4.50+ in EPS.”

“The data shows PlayBook appealing to early adopters and power users, given its differentiation from iPad,” Abramsky told clients, noting that six percent of the survey group said they were “likely” to buy a PlayBook. Of those, one percent were “very likely” and the remaining five percent “somewhat likely.”

So six percent of respondents are very/somewhat likely to buy the PlayBook once it becomes available. That’s about half the level of interest expressed in a similar survey of iPad-buying intentions ahead of that device’s debut last year. And Apple ended up selling 14.8 million iPads in 2010, far beyond analyst consensus estimates of 3.3 million. So Abramsky four- to six-million forecast might not be that far off–assuming the PlayBook proves to be all that RIM claims.

That said, the tablet market today is very different than it was prior to the iPad’s debut. And with the legion of new tablets headed to market, including the iPad 2, Abramsky’s forecast could prove optimistic. Remember, despite the leverage of RIM’s installed base and the promise of the BlackBerry’s security and manageability, the PlayBook is still missing some of the platform elements that have made the iPad so successful–a thriving apps ecosystem, a vertically integrated platform and iTunes.

*Barbara Stymiest, chief operating officer at RBC Financial Group, sits on RIM’s board of directors. RBC also makes a market in RIM Securities.

• 13.7 million Macs sold in FY 2010
• That’s 3 times the number of Macs Apple sold just five years ago
• The Mac’s installed base is 50 million
• Mac sales accounted for $22 billion in revenue in FY 2010
• That’s 33 percent of Apple’s revenue
• And it’s enough to make the company’s Mac business No. 110 on the Fortune 500–if it were a standalone business
• Quarterly Mac sales grew 2.5 times faster than the rest of the industry (according to IDC)
• The Mac has outgrown the PC market for 18 straight quarters
• The Mac claims 20.7 percent of the U.S. retail market (according to NPD)
• There are 600,000 Mac developers
• The above number is growing by 30,000 per month
• Mac customer satisfaction is the highest in the industry
• It’s No. 1 in customer satisfaction (according to ACSI)
• It’s No. 1 in tech support for the last seven years (according to Consumer Reports)
• It’s No. 1 in customer support (according to PC World)
• There are 318 Apple retail stores in 11 countries
• Apple retail stores sold 2.8 million Macs last year
• 50 percent of them were sold to first-time Mac buyers
• Apple sold 2 million iPhoto photo books in the past year
• There are 5 million GarageBand users

Adding new purchases to that, Huberty figures Apple (AAPL) will sell at least 42 million iPhones in calendar year 2010, assuming a 30 percent upgrade rate for existing customers. If the rate hits 50 percent, sales will grow to 48 million. In 2011, Huberty expects another 19 million upgrades.

Result: “We see the iPhone installed base rising from approximately 30M subscribers at the end of 2009 to over 100M by the end of 2011,” says Huberty. “We believe there are several key drivers of iPhone upgrades including: 1) Redesigned hardware with many new important features, 2) ‘Stickiness’ of the installed base due to App store and iTunes, 3) 57% of U.S. installed base is not fully upgradeable to iOS4 (i.e. no multitasking), 4) Early upgrade incentives from AT&T and 5) Maturation of the installed base. We would also point to AT&T’s introduction of tiered data pricing (that potentially reduces iPhone total cost of ownership by 20%+) as a possible driver of the strong initial pre-order activity.”

Riffing on rumors of a Verizon (VZ) iPhone, Morgan Stanley (MS) analyst Katy Huberty theorizes in a research note this morning that given the opportunity, nearly 17 percent of the carrier’s customers would upgrade to an iPhone (see chart below; click charts to enlarge).

“According to our [Alphawise U.S. consumer iPhone survey], there is substantial pent up iPhone demand within the Verizon installed base as 16.8 percent of Verizon subscribers said they are ‘very likely’ to purchase an iPhone if offered on the Verizon Network,” Huberty writes.

“This 16.8 percent is higher than AT&T subscriber’s 14.6 percent extreme interest in the current AT&T iPhone,” Huberty elaborates, “and well above the overall iPhone extreme interest of 7.5 percent.”

Assuming Verizon does add the iPhone to its smartphone lineup and that most of its subscribers who said they were “very likely” to purchase the device do so over a two-year period, Huberty figures Verizon stands to sell about seven million to eight million iPhones annually.

Interestingly, Huberty’s forecast for Phone demand at Verizon does not assume sizable subscriber losses at AT&T. In her view, the end of the carrier’s iPhone-exclusivity deal won’t be the blow some observers claim. AT&T (T) and Apple (AAPL) will obviously remain partners, she says.

In markets where the iPhone has gone from single-carrier to multiple-carrier distribution–France, for example–the carrier that lost exclusivity hasn’t suffered much at all. Beyond this, there’s the issue of early-termination fees, which will make it difficult for current AT&T iPhone users to flee. Says Huberty:

• 60 percent of the iPhone base is locked until 2H11/1Q12. An iPhone refresh could bring a new wave of subs to AT&T and extend the lock-down of those who upgrade. 80 percent of AT&T’s postpaid subs are sticky customers (70 percent are on a Family Plan (FP); 40 percent on business discounts).
• For current subs, the Early Termination Fee (ETF) is $175 falling $5/mo for the term of the contract; for new smartphone subs it’s $325, falling by $10/mo. Every line on a FP has a contract/ETF of its own. In addition, customers would have to pay for a new device if switching carriers.

One final point: Huberty sees Apple shares hitting $400 sometime in 2011. Why? “The market underestimates the earnings power of Apple’s mobile Internet devices,” she wrote. “We view the combination of new product launches, broader distribution [carrier, international, enterprise], more attractive pricing and strong upgrade rates as the key demand drivers over the next two years.”

Magazine trade pub Minonline has a gallery of sites that didn’t work for iPad users this weekend, presumably because they use Adobe’s Flash, which doesn’t work on the Web browser Apple uses on its gadget. One was Condé Nast’s GQ, whose front page has an item promoting…its iPad app:

Digital Daily’s John Paczkowski, a proud iPad owner, tells me that the GQ front page now looks okay from the browser of his new machine. Except if you try to play the video promoting the GQ iPad app, in which case you’ll get this message:

So that’s a little embarrassing. But not a big deal, really, since the effect of Apple (AAPL) and Adobe’s (ADBE) spat won’t be visible to most Web surfers. The iPad’s installed base, after all, is around 300,000.

In fact there, were only a few of reasons to have your site ready for the iPad on Saturday:

• The chance to earn corporate bragging rights.
• The chance to get on Apple’s good side and perhaps earn a spot on Apple’s “iPad ready” list. Though I know of at least one publisher that worked overtime to overhaul its site, at Apple’s prodding, and that still isn’t on the list.
• The chance to earn a big pile of advertising dollars from marketers who wanted to be associated with the iPad’s launch.

That last one is the most compelling, of course. But my understanding is that this was a pretty binary proposition. Either your site got some of money big brands were spending to be part of the launch or it got nothing.

And if you’re in the latter group, it doesn’t matter if your site becomes iPad-ready in two weeks or two months–you’re not getting in on that bonanza.

Meanwhile, some publishers are making a point of not converting their sites into iPad-friendly formats. But that’s a different story…

Speculation about a potential Google/Bing swap on Apple’s platforms has swirled for months, but Barclays Capital analyst Douglas Anmuth notes that we’ll get our first real clue in a couple days.

When Apple ships its first iPads on Saturday, lots of Google (GOOG) investors will head straight to the gadget’s Web browser to see which search engine Apple (AAPL) is using as its default choice. Straightforward logic: If Bing ends up on the iPad, then the iPhone–with its installed base of 48 million units–would be next.

Microsoft (MSFT) would certainly like to have pole position, and Anmuth notes that the company has bought Bing some distribution via toolbar deals with HP (HPQ), Dell (DELL), Verizon (VZ) and others. So what does he think will happen this weekend?

Overall, we believe there is a better than 50% probability that Google remains the default on Apple mobile devices–if nothing more because Apple is extremely focused on the user experience and Google’s 65%+ search market share speaks for itself. As a result, Apple may not want to risk disrupting the iPad or iPhone user experience with a shift to Bing.

Shorter version: Google may stay. Or go. We’ll see.

A piddling amount considering that sales of Apple’s (AAPL) iPhone and Motorola’s (MOT) Droid topped out at one million and 1.05 million after their first 74 days of availability. In other words, sales of those two devices have surpassed those of the Nexus One by a factor of eight (see chart below; click to enlarge).

If Flurry’s estimate is correct, the Nexus One is proving an enormous disappointment. And it’s not as if it has suffered from lack of promotion. After all, Google promoted it from the front pages of two of its most highly trafficked properties: Google.com and YouTube.

Perhaps consumers are finding Google’s (GOOG) new direct-to-consumer sales model off-putting (although I really don’t see why). Perhaps the company’s choice of T-Mobile as an initial carrier has narrowed the available market a bit too much and demand will spike when the device finally arrives at Verizon (VZ). But such poor sales performance is certainly a blow to Google’s plan to upend the consumer-carrier relationship.

As Flurry notes in a blog post detailing its data: “As Google and Apple continue to battle for the mobile marketplace, Google Nexus One may go down as a grand, failed experiment or one that ultimately helped Google learn something that will prove important in years to come. Apple’s more vertically integrated strategy vs. Google’s more open Android platform approach offer strengths and weaknesses that remind us of PC vs. Mac from the 1980’s.”

Amplifying the comparison, the report continues: “A key difference this time around is that Apple is enjoying much more 3rd party developer support, whose innovative applications push the limits of what the hardware can do. Ultimately, however, developers support hardware with the largest installed base first. For Android to make progress faster, from a sales perspective, it needs more Droids and fewer Nexus Ones going forward.”

But much as concertgoers might loathe the idea of giving Live Nation (LYV) even more of their money, they may soon do so. Because beginning today, the company is offering exclusive audio and video recordings of some of its events through Apple (AAPL) iTunes. Prices start at $7.99, which seems astonishingly reasonable for live recordings of this quality. More so when you factor in Live Nation’s involvement.

Not an original idea, by any means; Metallica, Primus, The Pixies, Phish and others have been peddling soundboard recordings of their shows through their official sites for years now. But this is the first time, I think, that we’re seeing the live side of the music business really leverage iTunes and its massive installed base.

And, let’s face it, this is a great idea, indeed. I saw two live shows in the past few months and happily paid $10 and $14 for soundboard recordings of each. But I had to spend some time seeking them out, creating a new customer profile, etc. It would have been much nicer to just fire up iTunes and buy them both with one click.

That’s the pitch Apple has been making to TV networks in recent weeks. The company is trying to round up support for a monthly subscription service that would deliver TV programs via its multimedia software, multiple sources tell me.

Apple (AAPL) isn’t tying the proposed service to a specific piece of hardware, like its underwhelming Apple TV box or its long-rumored tablet/slate device. Instead, the company is presenting the offer as an extension of its iTunes software and store, which already has 100 million customers.

A so-called “over the top” service could theoretically rival the ones most consumers already  buy from cable TV operators–if Apple is able to get enough buy-in from broadcast and cable TV programmers.

That’s a big if: Apple has told industry executives it wants to launch the service early next year, but I have yet to hear of a single programmer that has made a firm commitment to the company, which has tasked iTunes boss Eddy Cue with promoting the idea.

Industry executives believe that if anyone jumps first, it will be Disney (DIS), since CEO Bob Iger has shown a willingness to experiment with Apple and iTunes in the past: In 2005, Disney was the first player to sell its programming on iTunes, via a-la-carte downloads. And Apple CEO Steve Jobs is Disney’s largest single shareholder, a result of Disney’s 2006 acquisition of Jobs’s Pixar animation studio. Apple didn’t respond to requests for comment.

Network executives I’ve talked to are intrigued by the idea–they are eager to find new revenue streams–but are also wary, for several reasons.

Cable networks, for instance, don’t want to threaten existing relationships and subscription fees from cable providers like Comcast (CMCSA). And programmers are also worried about the effect a subscription service would have on advertising revenue: Even if the service didn’t distribute TV programs until after their initial air date, that could cut into ratings, which now measure viewership over the course of several days.

But the move to deliver TV and movies over the Web is already well under way. Netflix (NFLX), for instance, already bundles free streaming movie and television along with its disc-by-mail subscription service. iTunes and Amazon (AMZN) rent movies on a one-off basis, and Google’s (GOOG) YouTube is trying out the same thing. Meanwhile, Hulu, the joint venture between GE’s (GE) NBC, News Corp.’s (NWS) Fox, and ABC, is figuring out how to launch a paid service that may include rentals, paid downloads or subscriptions.

So Apple’s proposed subscription service, which the company has floated in the past, is no longer a huge stretch. Says one executive briefed on the company’s plans: “I think they might get it right this time.”

“We are very impressed by Apple’s ability to post a record profit quarter during difficult macro spending conditions,” Canaccord Adams analyst Peter Misek said in a note to clients this morning. “A host of new product introductions and continued traction with the iPhone give us confidence in the sustainability of Apple’s operating model.”

Suffice it to say, Misek wasn’t the only the analyst lauding Apple’s (AAPL) fourth-quarter performance. Below a selection of commentary from other Apple watchers:

Gene Munster, Piper Jaffray
“September results were strong despite headwinds of iPhone production constraints and a Mac desktop offering in need of a refresh. We expect these headwinds to become tailwinds in the December quarter, which we believe will be positive for AAPL shares in the coming months.”

Mike Abramsky, RBC Capital Markets
“With strong financial performance and product uptake amidst recession, and further catalysts (iPhone in China, Tablet, refreshed iMacs, iPhone share gains/momentum), we foresee further upside for the shares.”

Maynard Um, UBS
“Upside to virtually every metric in the qtr backs our positive view on Apple. We continue expect greater “recurring” iPhone hardware revenue (growing installed base & stickiness of the App Store), which should drive more visibility into iPhone sales (20%+ of our FY10 iPhone shipments), as well as iPhone expansion driven by new partnerships (& end of exclusivities). Longer term, we believe a service to provide seamless access & mobility of digital content across all products may be the draw (halo) that drives additional future Apple product sales.”

Tavis McCourt, Morgan Keegan
“Overall, Q4:09 was a strong quarter for Apple, as the Mac is nearly becoming the de facto computer for the back-to-school season. Additionally, iPhone trends remain remarkably strong, with unit economics holding up at unheard of levels in the wireless industry.”

Yair Rainer, Oppenheimer
“As usual, Apple appears to be leaving plenty of room for upside surprises to both revenue and margins. On the revenue side, Apple should benefit from continued Mac momentum (particularly in Europe), higher recognized iPhone revenue, and some channel fill for both Mac and iPhone. Gross margin upside is likely to come from a higher proportion of recognized, high-margin iPhone revenue.”

“We are very impressed by Apple’s ability to post a record profit quarter during difficult macro spending conditions,” Canaccord Adams analyst Peter Misek said in a note to clients this morning. “A host of new product introductions and continued traction with the iPhone give us confidence in the sustainability of Apple’s operating model.”

Suffice it to say, Misek wasn’t the only the analyst lauding Apple’s (AAPL) fourth-quarter performance. Below a selection of commentary from other Apple watchers:

Gene Munster, Piper Jaffray
“September results were strong despite headwinds of iPhone production constraints and a Mac desktop offering in need of a refresh. We expect these headwinds to become tailwinds in the December quarter, which we believe will be positive for AAPL shares in the coming months.”

Mike Abramsky, RBC Capital Markets
“With strong financial performance and product uptake amidst recession, and further catalysts (iPhone in China, Tablet, refreshed iMacs, iPhone share gains/momentum), we foresee further upside for the shares.”

Maynard Um, UBS
“Upside to virtually every metric in the qtr backs our positive view on Apple. We continue expect greater “recurring” iPhone hardware revenue (growing installed base & stickiness of the App Store), which should drive more visibility into iPhone sales (20%+ of our FY10 iPhone shipments), as well as iPhone expansion driven by new partnerships (& end of exclusivities). Longer term, we believe a service to provide seamless access & mobility of digital content across all products may be the draw (halo) that drives additional future Apple product sales.”

Tavis McCourt, Morgan Keegan
“Overall, Q4:09 was a strong quarter for Apple, as the Mac is nearly becoming the de facto computer for the back-to-school season. Additionally, iPhone trends remain remarkably strong, with unit economics holding up at unheard of levels in the wireless industry.”

Yair Rainer, Oppenheimer
“As usual, Apple appears to be leaving plenty of room for upside surprises to both revenue and margins. On the revenue side, Apple should benefit from continued Mac momentum (particularly in Europe), higher recognized iPhone revenue, and some channel fill for both Mac and iPhone. Gross margin upside is likely to come from a higher proportion of recognized, high-margin iPhone revenue.”

That’s what ngmoco co-founder and Electronic Arts (ERTS) alum Neil Young said of Apple’s iconic handset at the Game Developers Conference in San Francisco earlier this year, and it’s worth reflecting on a bit in light of a new report from Bernstein Research analyst Toni Sacconaghi that claims the iPhone OS will soon create pricing and customer migration pressure for traditional gaming platforms.

Noting that some 665-760 million games may have been downloaded from the Apple (AAPL) App Store during the last 12 months, Sacconaghi estimates that the installed base for the iPhone and iPod touch platform could amount to about one third of the total handheld gaming installed base by 2012.

“We believe that gaming embodies the power of Apple’s App store: it has dramatically lowered the entry barriers for both developers and gamers alike, resulting in an unparalleled number of available games at affordable prices, which is creating lock-in and enhanced interest in Apple’s high-margin iPhone (and iPod Touch) platforms,” Sacconaghi writes.

Continuing, the analyst adds: “By most measures, gaming has been the killer App Store category, accounting for an estimated 40% of all downloads. Most importantly, we believe that gaming is providing yet another incremental, differentiated reason for consumers to purchase iPhones and iPod Touches, and creates powerful lock-in to the App Store platform and Apple products on a go forward basis.”

The upshot of all this is bad news for traditional gaming console developers–particularly those who have dismissed it as a novelty. “Most gaming developers today view the iPhone and other smart phones as an incremental opportunity, which targets the casual gamer but not the dedicating gaming enthusiast,” Sacconaghi explains. “Over time, however, we believe that the combination of evolutionary improvements in iPhone/iPod gaming functionality, the convenience of the App Store download model, the App’s Store leading title selection and lower price points could cause some migration among gaming enthusiasts to the Apple platform and/or pressure traditional gaming incumbents’ hardware and software pricing.”

And this is clearly what Apple (AAPL) is aiming for. Consider these recent remarks from Phil Schiller, the company’s senior vice president of worldwide product marketing: “People are starting to see what a great gaming device this is. When you think about the companies that came before us…when you played those other systems, they seemed so cool, but now when you look at them, they don’t stack up against the iPod touch….No Multi-Touch user experience, Games are expensive, No App Store, No iPod, Expensive Games ($25-$40) and uncomfortable retail buying experience. [There are] 607 games for PSP and 3,680 games for Nintendo DS. [But there are ] 21,178 Game and Entertainment Titles at App Store.”

Bernstein Research analyst Toni Sacconaghi estimates that Apple (AAPL), though it is only the fifth-largest handset vendor, claimed nearly a third of handset industry profits in the first half of 2009 (see table below; click to enlarge).

“Our analysis indicates that Apple’s iPhone accounted for only 8% of handset industry revenues but 32% of industry operating profits in 1H09,” Sacconaghi wrote in a note to clients today. “Even if we exclude the operating losses generated by Motorola and Sony Ericsson, Apple still accounted for 25% of industry profits. iPhone’s success is akin to Apple’s position in the PC industry–where the company enjoys an estimated 25% of industry profits, despite capturing only 6% of industry revenues.”

Quite an achievement considering that the iPhone is just two years old. How did Apple manage it? According to Sacconaghi, Apple succeeded by claiming a first-mover advantage in an expanding high-end market.

“With the iPhone and its Apps Store, Apple has established a formidable smartphone ecosystem, which history suggests is very difficult to overcome,” the analyst explains. “In fact, Apple has the potential to become a de-facto standard of sorts in the consumer smartphone market, much like it became in the portable media player market with iPods, due in large part to its first mover advantage and tight software and hardware integration.

“We believe that over time,” Sacconaghi continues, “single function standalone handheld devices (portable music players, digital cameras, navigation systems, etc.) will become increasingly converged. Apple’s estimated installed base of 75+ million individual iPod and iTunes users provides customers with a seamless migration path to a fuller featured, higher-end integrated device.”

Though Sacconaghi believes Apple should be able to grow faster than the overall handset market without materially lowering prices, he suggests a lower price point might give a signifigant bump to its iPhone business. “We believe Apple will ultimately need to lower price (and margins over time) to expand its addressable market opportunity, including offering a lower-cost, non-data plan iPhone,” he concludes.

If that’s the kind of thing that makes you happy, then you would love today’s call, in which the exact same thing happened again. Twice! From my transcription/paraphrase this afternoon:

Q: What about getting into the low priced/netbook category?

Apple COO Tim Cook: “Our goal is not to build the most computers, it’s to build the best. Whatever price point we can build the best in, we will play there. At this point, we don’t see a way to build a great product at that price point, $399, $499.” We think many customers buying those find themselves “disenchanted” after buying cheapo/netbooks.

Q: Do you think there is an emerging market for a “truly mobile device” with a larger screen, a market big enough that you may want to participate?

Cook: “Never want to discount anything in the future,” and never want to answer specifically your question about new products. [Duh.] But boy, do we think netbooks are lousy, and we think customers agree.

Two things here:

1. Apple has a history of disparaging products and markets right before they unveil their own. So it’s not unreasonable for analysts to keep asking about the prospects for a supercheap Mac laptop. But Apple really is emphatic about its distaste for these machines.
2. Apple is not ruling some sort of device that’s more expensive than a netbook and less expensive than a $999 MacBook…and may have a big touchscreen…and is bigger than an iPhone, etc. Something, perhaps, like an $800 iTablet. We’ll see.

EARLIER:

Joining call late; analysis of Q3 results here.

Reading from prepared statement:

• Eight billion songs purchased and downloaded from iTunes store.
• Slight uptick at Mac retail stores. 50 percent of Macs sold at stores to customers who didn’t own Macs before. 258 stores. 27 store remodels.
• Gross-margin improvement: Component cost increase not as high as expected; weaker U.S. dollar helped.
• Cash pile: Will be invested in short-term investments. First week of Q4, made $500 million payment to Toshiba for future supply of NAND flash memory.

Q&A:

• Please talk about your relationship with wireless carriers (i.e., when will you dump AT&T (T) for Verizon (VZ). Tim Cook: “I think that most of the carriers we’re doing business with are thrilled with lower churn…and, of course, their customers are demanding the iPhone.” Do you see opportunity beyond the iPhone, like data plans for laptops with AT&T? “Nothing to be announced today.” How’s your relationship with AT&T? “I think it’s an excellent relationship and we’re very happy with it.”
• Discussion of education and professional market for Mac laptops/PCs–both affected by economy more than consumer market, i.e., schools and corporations are less likely to spring for shiny new Macs than Joe Sixpack.
• How is the $99 iPhone performing? As we made changes–launch of 3Gs and lower-priced iPhones–we saw acceleration of unit sales. But won’t break down mix. Supply of phones has been “constrained” and demand is robust. Opportunity for enterprise sale? Big opportunity. Doing well with small business, and with big corporations and agencies where employees can purchase for themselves.
• Guidance details? No change in thinking regarding guidance offerings. We usually see an increase in Mac units from June to September, but we think the sequential increase will be less than in previous years since we’ve refreshed our lines a while back. Also, education sales are “under pressure from budget shortfalls.” Same thing with the iPod: We think we’ll see a decline for regular players but an increase for the iPod touch. Seasonality makes projections a little funky this time around given timing of product launches.
• Channel inventory for iPhone lower is than we would like; there are 1.83 million phones in inventory.
• Given the $999 MacBook and price cuts for the Mac line, is the MacBook more or less elastic than anticipated? As we expected, some people are now buying up, because they can get the Macbook Pro for $1,199, down from $1,899. “We’re not thinking fundamentally different about the Mac business than we were before.” If we can build great Macs at lower prices, we will, but we won’t put the Mac brand on products that aren’t up to our standards.
• Update on Snow Leopard? Why such a low price point? Snow Leopard is priced aggressively so that all our users can upgrade to it, and we expect that they will. What commodity prices are you worried about, what should we think of the Toshiba prebuy? Are others coming? The market for DRAM and large-size LCDs has “shifted to constrained environment” and prices have moved accordingly. The NAND supply is getting better. We have a long-term supply agreement with Toshiba. We view flash as key component because we use it in so many products, and we’re a big consumer on a worldwide basis. We’re always open to similar deals. We’ve done one with LG on LCDs. We may do others, but we’re not working on one now.
• Please talk more about consumer demand for lower-priced laptops. No details forthcoming. But on macro level: Once price changes, people are upsold from $999 unit to $1,199 unit. [We just heard that.] Prior to change, we had seen people leaning toward the $999 product. What about pricing on iPhone side? Sounds like $99 3G iPhone helped drive traffic to the $199 3GS iPhone. Was that the plan? We’re focused on total iPhone units. So we’re psyched about 5.2M iPhones sold. Also, take note that the 3GS is in short supply and not available in all territories. Also, early in cycle, you have more upgraders, and upgraders are more likely to get higher priced phones. Still, too early to tell about product mix.
• Competitors are now finally coming out with rival app stores–Pre (barely), BlackBerry, etc.). What are you up to in answering back? Well, we just launched OS 3.0. That’s pretty great. It has an Installed base of 45 million (iPhones and iPod touch). We have a gazillion apps. According to the latest numbers from Nokia (NOK) and RIM (RIMM), they have a couple thousand each; Android has maybe 5,000. “We feel extremely good about our competitive position and continue to believe that we’re light years ahead of other people.”
• What about getting into the low-priced/netbook category? Tim Cook: “Our goal is not to build the most computers, it’s to build the best. Whatever price point we can build the best in, we will play there. At this point, we don’t see a way to build a great product at that price point, $399, $499.” We think many customers buying those find themselves “disenchanted” after buying cheapo/netbooks.
• Is the carrier network strong enough to handle all the apps and the more robust apps you’re coming out with every day? Non-answer. Do you think you guys will make investments on the side to take pressure of carrier-capacity issues? No plans. When we entered business, we looked at it, decided what we could do well was deliver the handset. I think there are other people that have more skills in the network area, and I think we have a lot of those partners.
• Back to netbooks and things like netbooks, but better, like the iTablet: Do you think there is an emerging market for a “truly mobile device” with a larger screen, a market big enough that you may want to participate? Cook: “Never want to discount anything in the future,” and never want to answer specifically your question about new products. [Duh.] But, boy, do we think netbooks are lousy and we think customers agree.
• Any info on iPhone sales split between new buyers and upgrades? Nope. Okay, how about the app store? It looks like prices are in a “race to the bottom”; there are lots of 99 cent apps. Are you worried about that? And can you help customers distinguish between good ones and “garbage”? Cook: “We realize there’s further opportunity for improvement” regarding promoting quality apps, etc. Regarding price: It’s up to the developers. As the installed base grows, it makes more sense to have lower prices, but that’s up to the developers.

Call finished.

More than six million downloads by Microsoft (MSFT) Windows users? That means that Safari 4, at least at the outset, is more popular on Windows than on the Mac.

Now, the former’s installed base is significantly larger, I know. But still…. Clearly, Apple’s (AAPL) 2007 decision to suggest Safari to Windows users via the iTunes software update has done great things to boost usage on that platform. As Apple CEO Steve Jobs said when Safari for Windows was first announced:

How are we going to distribute [Safari for Windows]? We don’t really talk to these customers, do we? There are over 500,000 downloads of Firefox a day. What are we going to do? Well, it turns out, there are over 1 million downloads of iTunes a day. As a matter of fact, there have been over a half a billion downloads of iTunes to Windows Machines. Over half a billion. And so we know how to reach these customers and we are going to do exactly that.

And successfully, too.

Among those doing so today: Morgan Stanley’s Kathryn Huberty, who lifted hers to $180 from $105, arguing that iPhone demand through 2010 is being underestimated by the market and will help drive Apple’s stock value up. “We believe Apple is emerging as the clear leader in the battle over the mobile Internet,” Huberty wrote in a research note to clients, adding that some future pricing adjustments will only solidify that position. “We expect a price cut to the current generation iPhone to drive 50 percent to 100 percent (two million to four million units) incremental unit demand,” she said. “Our survey data suggests 15 percent plus of the iPhone installed base typically upgrade to a new phone.”

A bullish call, especially for Huberty, whose opinion of Apple has historically been mercurial at best. Shares of Apple (AAPL) rose five percent to $128.60 in early trading this morning.

Tempering Huberty’s exuberant pronouncements today is Global Equities Research analyst Trip Chowdhry, who tells Reuters that the iPhone will suffer a bit at the hands of the Palm (PALM) Pre, which is scheduled to arrive at market on June 6. “Investors should not think the upcoming version of iPhone 3 is going to be as successful as iPhone 2.0 because it will have solid competition from Palm Pre, developed by ex-Apple designer Jon Rubinstein,” Chowdhry said. “Palm Pre has a superior operating system than iPhone. It runs on a better network–Sprint CDMA-versus iPhone which runs on GSM.”