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VIDEOIt's Apple's World; We Just Live in It
No worms in the Apple conference.
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Frankly, given the magnitude of the home run for Apple (AAPL) at the Worldwide Developers Conference, it's surprising the company didn't end up higher by $5. I'm viewing much of this from a different lens, as usual, and here are just a few things springing to mind.
Thoughts on the iPhone News
1. Every single sales estimate for the iPhone is too low now -- including mine. This lowered price point is a huge boom for future distribution agreements as it still gives AT&T (T) a nice chunk of recurring revenues and retention, but allows higher margin sales and double or triple the customer base as Verizon (VZ) and others come online
2. The 3G S looks so good that everybody who already has an iPhone is going to want the new one! I know because I have an iPhone, and felt immediate pangs of longing for the S.
3. One subtlety of the "aggressive" OS price point is that, while selling phones at lower prices might hamper margins, the software margins will decisively swamp that effect. Moreover, I'll take double (or triple) the phone sales and a much more pervasive halo effect over a couple points of initial iPhone margin all day long. 
4. The iPhone is now set to target the enterprise market with abandon.
Further OS Implications
1. This is a powerful attempt at trumping whatever Microsoft (MSFT) Windows is going to do. 
2. I believe this sets up further enterprise penetration, which is wide open for Apple currently on the computing side.
3. This helps get consumers off the fence who have purchased iPhones, and may have been hesitant to purchase Macs thus far.
4. It is just huge for brand loyalty. This is hard to measure but incredibly important. 
5. Keeps the now much larger Apple customer base "unified." This strengthens customer transitions, sets up cross-selling opportunities and so on.
Soon, instead of consumers dividing into those who use a Microsoft product and those who use an Apple, there will be simply be those who use an Apple and those who have yet to buy one.
Overall, the event was beyond expectations and those who talk of compressed margins and "having to slash prices" to move product are totally missing the beat here. Frankly, having Steve Jobs show up would have been overkill.
As far as where this takes the stock? I think that it's just a function of time. But estimates, free cash flow, and the stock price are all moving considerably higher.
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