Are High Expectations Apple's Biggest Challenge?

Jun. 4.08 | About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) has notched another milestone in its iPhone international expansion by inking a deal with Softbank Mobile to bring the device to Japan “later this year.”

In a statement Softbank Mobile said:

SOFTBANK MOBILE Corp. today announced it has signed an agreement with Apple to bring the iPhone to Japan later this year.

For those keeping score at home Apple has nearly every country lined up except for China and the terse announcements come almost weekly. Sure Softbank Mobile isn’t exactly NTT DoCoMo, but it’ll do. Now let’s increase those iPhone unit shipment targets–again. Apple’s target is 10 million iPhones in 2008, but Piper Jaffray predicts more than 12 million. Oppenheimer estimates Apple will beat 14 million.

In recent days, Wall Street analysts have been trying to curtail expectations about Apple, its 3G iPhone prospects and what will be announced at the Worldwide Developer Forum on Monday during Steve Jobs’ keynote. But it’s too late. Expectations may already be out of control.

Here’s how the game works: Apple generates buzz, rumors swirl, bloggers chatter, Wall Street gets bullish and before you know it we’re expecting Jobs to not only launch a 3G iPhone, but cure cancer and the common cold too. When Jobs actually delivers another great sermon to the Apple faithful there’s a slight letdown. Why? Folks got too far ahead of themselves in anticipation of Apple’s keynote.

To wit: Bodoglife. com has odds on what Jobs will announce at WWDC. Be sure to take Jason O’Grady’s poll based off of the Bodoglife.com odds.

Ahead of Jobs’ big performance here’s what folks are expecting:

Mac OS X 10.6: The Unofficial Apple Weblog floats a rumor that developers will get a seed version of Mac OS X 10.6, a build that will be focused on security and stability. Given Apple’s penchant for massive patch days a little more stability and security could be warranted.

A MacTablet: Jason O’Grady says that Apple may announce a MacTablet in the fall. Could this little tablet be previewed at the developer forum?

An App Store: News.com reported that Jobs will unveil its App Store and a bevy of third party applications for the iPhone. This tidbit isn’t all that shocking given Jobs basically outlined the App Store timeline last time around.

A 3G iPhone is also expected (with more storage and a thin form factor). If Jobs doesn’t announce a 3G iPhone the world of Apple will fall of its axis. But it’s safe to say a 3G version is on deck. Tech Trader Daily captures some of the angst about these ever-increasing projections for the iPhone. Pacific Crest Andy Hargreaves says the iPhone unit projections have gotten out of hand. Why? Not all of these potential new subscribers abroad will want an iPhone. Good point, but the transition from phone to smartphone is well under way and the iPhone is likely to get people off of the fence faster.

Of course, Hargreaves isn’t too worried since he has a $225 price target on Apple shares. Turns out the biggest threat to Apple isn’t necessarily competition as much as lofty expectations. Can Jobs say something that will propel Apple shares past its previous high?