Monday, June 09, 2008 12:00 AM/EST

What to Really Expect from Apple Today

News Analysis. It's time to bring those high-flying WWDC rumors down to earth.

There have been some crazy-ass rumors about what Apple CEO Steve Jobs will announce during the World Wide Developer Conference keynote; it begins at 1 p.m. EDT today. Everybody expects iPhone 2.0—and there has been chatter about .Mac re-branding, a red iPhone, Mac OS X 10.6 first showing, new MacBooks and even an iPod refresh.

I've covered Apple long enough to know that most rumors aren't exactly right, that there are many fake photos and documents circulating before major announcements (Can you say Photoshop?) and that last-minute changes can turn near certain announcements into fiction. Until Steve speaks, all speculation is rumor. But strategy isn't so nebulous. So, I present three strategies that are near certain to come from today's keynote, which I will be attending.

1. Mobile Platform. This is a no-brainer. With the iPhone SDK and iPhone 2.0 software, Apple has cued up its mobile device as a developer platform. It's absolutely the right approach, because:

Microsoft doesn't dominate the mobile market the way it does the desktop.

Manufacturers ship 1 billion mobiles—three times PCs—every year.

Mobile market leader Nokia has great lifestyle marketing, but its platform strategy needs work (e.g., it's vulnerable to competition).

The cell phone is the captive market because it's a device most people carry most of the time.

Worldwide 3G and worldwide distribution will give iPhone platform reach.

2. Mobile Lifestyle. The most successful products share something in common: Lifestyle. Apple successfully sells different, but complimentary, lifestyles around iPhone, iMac and iPod/iTunes. T-Mobile hawks a youth texting/socializing lifestyle around Sidekick and RIM; an e-mail/connected BlackBerry lifestyle. Harley Davidson appeals to men that want to feel tough, at least on weekends riding their hogs. Nokia has the best lifestyle marketing of mobile manufacturers—and advertising that's even better than Apple's.

I don't doubt that the rumors of a .Mac overhaul are true. If they're not, then Apple is screwing up. The iPhone needs Web services support and better connections on the Mac and Windows. The time is right for iPhone IM—even iChat for Windows—and over-the-air sync for all content types, including calendar, contacts, photos, music and videos among others. Even better; online storage and content sharing for iPhone. Apple would promote the services as part of a mobile lifestyle that would be excellent on Windows and even better on the Mac: Your life, anytime and anywhere.

3. Carrier Subsidies/Unlocked phones. The overseas trade in unlocked iPhones caused massive shortages in Apple retail stores over the last couple months. That's demand Apple can tap at both ends of future iPhone 2.0 sales: Lower prices for some customers and unlocked phones for others. I believe the rumors of a $199 iPhone from AT&T are probably true. It's possible Apple would offer a smaller, cheaper device but time isn't right for such an iPhone. More likely: AT&T offers a subsidized, locked iPhone for two-hundred bucks. The device also would be available, unlocked, at full price.

Apple could use such a strategy to skirt regulatory issues and local laws in some geographies, while opening up iPhone to more carriers. In many markets, Apple would offer—and already is set to—iPhone through multiple carriers. T-Mobile users could use unlocked iPhones in the United States, but not Sprint and Verizon customers, because of network incompatibilities.

A year ago, Apple had to make exclusive carrier concessions, which wouldn't need to change under the locked/unlocked strategy. Apple was an upstart coming into a new market. But huge iPhone demand puts Apple in a strong negotiating position. It's the carriers asking for iPhone now, not Apple seeking them out.

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