Apple still has no debt.

I consider it safe to assume that at least $10 billion will be added during 2010 for an end of year total of $50 billion.

To put that in perspective, there are only 76 companies (out of 2673 listed on Google finance) whose entire _market cap_ is greater than $50B. Nokia is not one of them.  Graph: AAPL cash accumulation

1. ASP has been increasing. It peaks immediately post-launch. Since it reflects a mix of two SKUs it also shows more early adopters opting from the higher-end model.
2. Gross margin reflects shipping and returns so there will be some improvements through the product cycle. Apple’s cost controls seem to have improved with later generation products.

This new accounting will allow more insight into Apple’s profit capture vs. industry players.

As we have said before: why bother with AdMob if Apple integrates ads into the SDK? Does AdMob offer better terms? Does AdMob offer more sponsors? It’s the developers (and Apple indirectly) who supply inventory.

Nokia Smartphones had a good quarter due to new launches.  I attached share and ASP comparisons for smartphones in both companies.

Much of Nokia’s growth is in so-called numbered devices (not N or E series).  This shows continued growth for Eseries sales driven by the advent of the E52, E55 and E72 mass market availability. Nseries devices sales remain relatively flat and are likely to included around 100,000 N900 (Maemo devices). Numbered devices also showed impressive growth against continuing good sales of the 5800 and the advent of the 5530.

Will it be a big hit? I think it will grow nicely and be profitable. It will take several iterations but eventually it will absorb usage from low-end laptops and move computing to new contexts. It will have amazing applications in certain verticals like education, health care, travel and automotive use.

All these steps are like checkboxes in the disruptor’s playbook. In 5 years, this will be as big a business as the Mac and then Apple will have to think how they break out of the 5% share ghetto.

Will there be a response? Yes, but, like with the iPhone, not for a long time, and not symmetrically. The PC guys will dismiss this and the phone guys will see it as outside scope. Once they begin the effort in earnest, it will fall well short of the entrenched, incumbent, integrated(*), rapidly evolving juggernaut that will be Apple Mobile Computing.

(*) Note the emphasis from Apple on its own CPU in the device. Apple does not talk about chipsets in their devices, but they did this time. Not only are they signaling control, but it also shows that value-chain integration down to silicon is what is needed to go up the performance trajectory for good-enough mobile computing.

0. feature rationing in effect. Apple is also clearly demarcating the product as fitting in a continuum of usage behaviors. If there will be cannibalization, it will be affecting Mac, not iPhone.
1. it’s a new line in the income statement. Accessories and other revenues will add cream on top.
2. Guessing a $600 ASP (in line with iphone)
3. For margin I’d go with high 30s, maybe half way between Mac and iPhone.
4. units: 3 million this year, 100% growth for 3 years. Could range higher but distribution deals will tell story. So far this looks more like a Mac. However, will Operators run with it? If so, then we’re looking at much higher numbers.
5. Is Apple going to get revenue share on the data plan? I would not be surprised if they do get a cut.
6. iWork on it is a wild card. Does not fit use cases but they might be testing waters.

“E&D is going through the biggest re-org the division has ever had. ERod has decided to pursue other opportunities effective immediately. TVM is no more. Windows Mobile is heading out of E&D and into Windows because Sinofsky pointed out Robbie’s continued failure in the mobile space during the December strategy review.”

This actually makes sense and should have been done much earlier to be consistent with their business model. WinMo was always a peculiar object in the E&D empire. It had a platform model but did not integrate with any of the other businesses (no interoperability with Zune, Xbox.) If they were to have built their own phone, maybe it would have something in common with the rest of the org. The other wild card is project Pink which seems to be a rogue entity. I have to say that none of this would have happened under Gates.

If the model is to concentrate on the platform, the economic value is dubious as Google already pulled the rug out on paid licenses.

We will see next week, but by my reckoning, Apple sold more iPhones and iPod Touch units last quarter than Sony Ericsson sold of all its phones.

The ASP is also likely to higher at maybe 400 EUR blended average, for a total sales of 6 Billion EUR vs. 1.75B for SE. That’s more than 3x the sales level.

Next year we might see >50% growth from Apple which would imply Apple overtaking Sony Ericsson in the phones market share race.

I should also point out that Symbian, Android and Windows Mobile hinge their business strategy to the Incumbents (mostly, though HTC is among the entrants and is muddling along).

As a rule, when an industry is being disrupted, making a bet on the sustainability of the incumbents is always a bad idea. Case in point: building a business that sustains the music labels today. Why would anybody pour resources and tie their career to that logic?

On the other hand, Apple is increasing cash more rapidly. I think $45b net cash by the end of this year is not unreasonable. It is also likely that Apple will not only have more cash than any other company on the planet but also more cash than any company has ever had.

(*) one more thing to keep in mind is that most databases list Apple’s cash incorrectly. EDGAR says cash is $23.46B. That excludes “long term” investments which are nearly $10b. For Apple the instruments for long term are the same as for short term: treasury bonds which have longer maturities but which have the same liquidity. It’s all in their SEC filings and management makes this clear in every earnings concall, but almost all reporting cites the short term figure only. Coupled with the hidden earnings under GAAP it’s tempting to think that there’s a conspiracy to keep Apple’s enormity minimized. Suits me fine.