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By Jonathan Chen

Apparently a few billion dollars, but does it really matter?

Apple (NASDAQ:AAPL) wrapped up its "big" iPhone press conference yesterday, and actually failed to live up to expectations for the first time, in what seems like forever. Or did it?

Apple announced the iPhone 4S, not the iPhone 5, as was the expectation of many on Wall Street, the press, and Apple fanboys alike. Instead, there was no drastic new product, at least that is what some would like you to believe.

If someone told you that a phone was being announced, and it had a new operating system (which deeply integrates Twitter), a faster chip than its predecessor, a better camera, a new app that allows essentially for the removal of the card industry, (bye-bye American Greetings (NYSE:AM-OLD) and Shutterfly (NASDAQ:SFLY), and new software that would radically change the way people interact with their phones, would you think it is a new phone? Of course you would. Unless you were Apple. Or its fanboys, Wall Street, and the press. The iPhone 4S is not being seen as a new phone, but merely a placeholder until the iPhone 5, and that is disappointing investors, and some tech geeks alike.

In addition to all the specs I mentioned above, the new iPhone 4S will be a world phone (running on GSM and CDMA networks), and tweaked the wireless networks and antennas as a result. Oh yea. It also includes a full 1080p HD resolution video, which Phil Schiller said, "To many customers, this will be the best still camera they've ever owned, and the best video camera they've ever owned."

The reason behind this? Expectations. The expectations were for the iPhone 5, and perhaps the iPhone 4S, and maybe even a pre-paid or entry level. I was talking with my fellow tech writer, Louis Bedigian about the fact that if Apple only released a iPhone 4S, it might shoot itself in the foot. From the look of the instant reaction, that appears to have happened, as Apple shares initially fell 4% after the end of press conference, but recovered to end down 0.6% on the day.

Apple has been the king of managing expectations, and this might be the first time ever that it really did not live up to expectations, if you believe the populace. On Twitter, Facebook, blogs, TV, and other forms of media, everyone seems to be disappointed. I suspect that if Apple had called this the iPhone 5 instead of the iPhone 4S, that the reaction would not be nearly as bad. Sure the two phones would look the same, but the differences between the screen size, thickness, and length would be negligible. The real differences are the A5 chip, powered by ARM Holdings (NASDAQ:ARMH) intellectual property, and the Siri™ personal assistant, which may be the most impressive thing Apple has ever done. Not to mention it is also now available on the Sprint (NYSE:S) network, and is in over 70 countries on over 100 carriers.

The prices for the iPhone 4S will be $199 for the 16 GB model, $299 for the 32 GB model and $399 for the 64 GB model. That is what is most important. Along with the specs, and the price, the name does not really matter. Yet, to investors, the tech press, and the fanboys, it does.

They will soon see the meaning behind the phrase: "A rose by any other name would smell as sweet."

The same thing applies to an Apple as well.

ACTION ITEMS:

Bullish:

Traders who believe that the iPhone 4S will still sell incredibly strong might want to consider the following trades:

  • Apple is getting hit here, but use the dip to add or initiate a position.
  • Also consider the suppliers, such as ARM Holdings, Qualcomm (NASDAQ:QCOM), Broadcom (NASDAQ:BRCM) and Omnivision Technologies (NASDAQ:OVTI).

Bearish:

Traders who believe that the iPhone 4S will be a let down may consider alternate positions:

  • Expectations WERE for the iPhone 5, and Apple did not deliver. This could be seen as a letdown to consumers, and they might push off buying the phone until the real iPhone 5 is announced. That could cause an Apple earnings miss, which is almost unthinkable at this point.
Source: What's In A Name: Whether The iPhone 4S Name Cost Apple Billions