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New iPhone Fails To Create iBuzz

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Gadget lacks must-have features.

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Dressed in trademark black shirt and blue jeans, Apple (AAPL) CEO Steve Jobs touted the merits of the new 3G iPhone at its Worldwide Developers Conference Monday.

"The new entry level iPhone," according to CNBC, "will cost $199 with eight gigabytes of memory, compared with the $399 price of the [first generation] phone with similar memory."
Early reports suggest the new gadget will also sport GPS and the $200 price tag would seem to make it more competitive with similar offerings, including the LG Voyager available from Verizon (VZ).

Still, the announcement was, overall, disappointing. Hold the angry emails for a minute, Apple bulls. Here's why:

Apple has built quite a track record of late. In spite of the naysayers, the iPod and the first iteration of the iPhone were big successes, plus the stock has fared quite well over the last couple of years. That said, this new gizmo just doesn't' seem to be generating the same level of excitement.

Now, this a completely qualitative, totally subjective observation. After all, there's no real way (at least none that I know of) to measure buzz. Yet buzz is key to the gadget -- and indeed Apple's -- success, because it could have an impact on the sell side and possibly Apple's forward-looking earnings forecasts. Buzz, or lack thereof, also has the ability to turn on or off would-be retail and institutional investors.

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The unveiling of the new iPhone may have likewise created a void. Now that the gadget's out of the box, consumers and investors may now turn their attention to "what's next?" The not knowing could cause some to abandon the stock in search of greener pastures. Trader types that were in the shares for a pop on the announcement may bail.

Fortune columnist Jon Fortt made an excellent point in an article he penned Monday afternoon: "For this device to truly fulfill its potential, I believe it will have to offer something totally new - something like photo and video editing, or a videoconferencing [application], or (most likely) something too cool for me to dream up."

To his point, the thing is pretty neat, but still needs something to make it a must-have.

Apple reportedly has a goal of ten million iPhones sold by the end of 2008. There's speculation the company could fall short and, given what I perceive as a lack of enthusiasm, that's entirely possible.

Finally, with the iPhone announcement out of the way, there's a chance investors could turn their attention to earnings. The current estimate for the second quarter is $1.08 per share and Apple has a good shot at hitting that number. But it's unlikely results will be announced until sometime in the middle of July, which could cause some investors to lose patience and the share price to wane.

Apple was off $4.03, or roughly 2%, in regular trading and closed at $181.61. In after-hours action the stock gained $0.47.

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No positions in stocks mentioned.

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