NEW YORK (TheStreet) -- In the wake of a disappointing jobs report from last Friday, investors hoped that Steve Jobs might deliver some great news about new products, but the reaction to his unveiling of a new iPhone this week was mixed.
In front of an enthusiastic crowd gathered at the
Worldwide Developers Conference Apple, a black-turtle necked Steve Jobs unveiled the fourth generation iPhone. Although previously leaked photos and details about the new phone took some of the surprise out of the event, the announcement was still surrounded by a great deal of hype.
During the heavily blogged event, Jobs highlighted the product's newly designed shape, the upgraded camera on both the front and back of the phone, enhanced motion control and a number of other tweaks. Then came the highly anticipated "one more thing."
This staple of Jobs' presentation has been known for leading to the introduction of a number of groundbreaking products including the iPod Touch and the MacBook Air. Leading into this year's event, hopes were high with many speculators forecasting the possibility that Jobs would, at last, unveil a
iPhone. Apple fans were instead presented with "FaceTime" a video-chat program allowing iPhone users to talk to other iPhone users over WiFi.
I would consider myself an Apple fan. However, following up the groundbreaking iPad with a new iPhone, where the biggest new feature is an Apple version of Skype, leaves me a little disappointed.
The iPhone, since its introduction on the heels of the extremely successful iPod, has helped to move the company beyond selling computers and has turned it into the consumer electronics giant it is today, with a market capitalization larger than
Apple plans on releasing the next generation iPhone in more countries than before and hopes are high that the phone will help to further increase revenue and push up share value for the company. But the gap between the iPhone and the phones using the Android operating system from
is closing. I think many Verizon customers would choose an iPhone over an Android phone if given the choice right now, but that once they have an Android phone, they will find that switching to an iPhone doesn't offer a great leap in terms of features.
Competition is heating between the two firms in other areas as well. While Google is encroaching on Apple's smartphone turf, Apple is going after Google's bread and butter, advertising.
Apple only recently started selling mobile internet ad space and still lags far behind Google in terms of ad revenue, but the company has already secured advertising for some large brands. Yesterday, Google also charged that Apple has rules in place that Google says will block it from selling ads that run in applications on the iPhone and iPad.
Apple may also hit back on the phone front. In the pipeline is also a potentially lucrative deal to get the iPhone working on the wireless network of Verizon later this year or early next year, as opposed to just being offered for users on the network of
. A recent security flaw in AT&T's network that gave hackers access to users' iPads only adds fuel to consumer complaints about the lack of a Verizon phone.
A further plus is that AAPL is also now targeting business people with its next generation iPhone as it has added many security features. This is a slice of the smartphone consumer market that has previously favored devices such as the Blackberry made by
Research in Motion
For ETF investors that want a technology fund weighted in favor of Apple and its iPhone, the
is the ETF to own. Apple is the top holding in the fund and accounts for 18.8% of the ETF; Google makes up 4.3% of the fund.
For ETF investors who want to have a fund heavily weighted Google,
First Trust Dow Jones Internet Index Fund
is a good choice. Google accounts for 8.8% of the holdings, while Apple is not represented in the ETF.
A third option is for investors to bet on the networking sector. Smartphones are using more bandwidth and the battle between Apple and Google will only move this demand higher.
PowerShares Dynamic Networking
iShares S&P North American Technology-Multimedia Networking
are the two choices here, with IGN the larger and more liquid option, but PXQ the better performing one.
All in all, it looks as though AAPL's prospects for growth remain strong and success for the company will translate into gains for QQQQ.
For those that doubt Apple still has room to run, the best way to tilt technology exposure in favor of their new competitor Google is with FDN, especially since it has no exposure to Apple.
Those who believe that the real winners will be the companies supplying the backbone components and services for the network should also consider a position in PXQ or IGN.
At the time of publication, Dion Money Management owned QQQQ and FDN.
Don Dion is president and founder of
, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.
Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.