Apple's New Software: Laying the Foundation for a Web 2.0 World

| About: Apple Inc. (AAPL)
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Apple's (NASDAQ:AAPL) software announcements at WWDC could greatly aid the development of a Web 2.0 friendly world. Individually these software advancements barely raise an eyebrow, but together with advances in ultra-portable hardware and Google’s (NASDAQ:GOOG) partnership, they will break new ground for portable computing:

1) Safari 3 Beta is now available free for Windows users. Now, any PC user can now test drive the main iPhone application. This is the start of a trojan horse campaign that will transition PC users to Mac software on Apple ultra-portables.

2) There is no developers kit [SDK] for the iPhone. Apple will tightly control the quality, the storage size, the efficiency and integration of all applications on the first generation of ultra-portables, much to the disappointment of developers. iPhone developers are being restricted to writing widgets or interactive web applications using Ajax. Shifting computing resources to the web, however, is a valued goal of Apple and Google as ultra-portables cannot afford bloated third party applications and excessive media storage requirements.

3) iChat now allows three way video conferencing with support for shared video, Keynote presentations and document sharing using Quick Look all within iChat’s new theater mode. The original iChat was mostly a socially interactive application, but it will now become an essential tool for on-the-go conferencing of working people and students.

4) Leopard introduces Spaces, Stacks, Quick Look and Cover Flow to drastically cut down on desktop clutter and hand and eye motions. They work by fast switching task-specific desktops, stacking useful documents and identifying folders and documents by icons, not to mention automatically channeling downloads to appropriate folders. Leopard uses core animation to do this in a visually simple but exciting way that maximizes the usefulness of screen real estate on a portable. ( Apple - Mac OS X Leopard).

The iPhone is the first sub-notebook device to which the new Mac software will be applied, but it is almost certain that more ultra-portable devices will come from Apple and they will run variations of Leopard with Mac software. I define ultra-portables here as sub-notebooks with light-weight screens less than 13 inches. They will be built without hard disks or CD drives, and possibly without hard keyboards or mice. The iPhone is the first in this line to introduce an advanced multi-touch interface. It starts Apple's major shift to LEDs in portables, and possibly AMOLED displays that are ultra thin, battery conservative and can be seen at any angle in bright daylight.

The iPhone will also provide automatic switching on the move between “trusted” access points in WiFi hot zones. This is great for web surfing and conferencing on the go. AT& T (NYSE:T) and GSM will provide superior cellular sound quality, not to mention a future for Apple ultra-portables in Europe. The iPhone will also directly exploit the worldwide success of the iPod by channeling many PC music lovers to their first experience of OSX, Safari, Mail and other Mac applications.

Even Apple's iWork 07 and Mac’s creative suite of iLife software have been rumored as iPhone applications, although there may have to be serious reductions in size. iWork applicationss are much more powerful than judged by their first appearance on screen. Pages can open and save to Word format and Charts is rumored to be a light weight substitute for Excel. Apple has greatly reduced the clutter of menus and toolbar icons ala Word and generally sticks to what most mobile people desire, leaving the bells and whistles of document creation to the secretary and Microsoft Office.

Similar, often identical, application tools are found in the toolbars of all Apple software -- the photo adjustment tool, the media access tool, the font tool and the inspector tools for formatting are quite compact and efficient for portable use. Their sameness across the Apple suite of software also eases the learning curve of new users. If ultra-portable users can be channeled to use these Apple applications on the go, then they will also take Mac software into their dorms, their apartments, their small businesses and their houses.

In many respects, Apple’s iPhone is the ultimate trojan horse to enter the software fortress of Microsoft (NASDAQ:MSFT). It will be followed by a full assault of new Apple ultra-portables yet to come. Google will be their primary ally in this radical transition to a new Web 2.0 world, and AT & T their new distributor and cellular partner. All three have a lot of resources and a great creative desire to make big waves in their industries. Needless to say, I am buying lots of Apple stock on the dips for the next year.

Disclosure: Author has a long position in AAPL