I'd Rather Have Apple Inc

Around this time last year, Apple Inc launched it's much talked about smart-phone. At $599 (+ tax), Mac lovers were treated to one of the most revolutionary piece of technology. At that time, Apple shares were trading at slightly over $122 and I said they were better priced than the iPhone.

Since then, AAPL has appreciated by more than 50% and the price of the 8G version has fallen from from $599 to $199. For the same amount of money, those who stayed away from the 1st generation iphone now have a chance of owning a much better smart-phone. With 3G capabilities, the new iPhone is bound to be better device than the first one.

At $69 (+ tax) a month for a two year contract, the cost of owning the new iPhone adds up $1855 compared to $2039 (+ tax) for the 1st generation iPhone.

Like last year, I'd rather buy Apple shares than buy the iPhone. At today's price of $176, you'd be getting 10 shares unlike last year when you'd have bought close to 17 shares.

However, I'd be slow to buying Apple shares. Even though the iPhone is going for a song, the weakening U.S economy and rising unemployment doesn't bode well for Apple's range of computer products. And with oil prices rising owing to the threat of Israel attacking Iran, consumers will be looking to cut back on discretionary spending.

In the coming weeks, it would not surprise me if we retest the 1 year low price. After which you can expect AAPL to rise as we re-enter the expansion phase of the business cycle.

Recommendation: Like all other Apple products, the iPhone sucks. It may impress your friends but it is not a practical phone. If you want a smart-phone, get a BlackBerry. If you want to listen to music, get a mp3 player. And if you want to surf, get a laptop.

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