No New iPhone? No Problem

CUPERTINO, Calif. ( TheStreet) -- Apple's ( AAPL) iPhone 4S launch has prompted much wailing and gnashing of teeth from devotees eager to see an iPhone 5, but what about the many positives in Apple's announcement?

Sure, Apple did not put out shiny new hardware, but so what? The new iPhone 4S, with its faster processor, better camera and worldphone capabilities represents a significant step up from earlier versions of the phone. Apple, let's not forget, also firmed up its iCloud and iOS 5 efforts, as well as adding Sprint ( S) to its list of iPhone carriers.
Apple introduced its iPhone 4S on Tuesday

"To us fans of all things Apple, the iPhone 4S includes some pretty awesome features, albeit in the same old packaging," explained Apple shareholder Ernie Varitimos, who runs the Apple Investor Web site, in an email. "We recognize the superior engineering, the industrial design, and the eco-system that surrounds the products -- the problem is that the rest of the world is far more concerned with superficial stuff, appearance and instant gratification."

Take iCloud and iOS 5, for example. Apple added flesh to the bones of these technologies during its iPhone launch event in Cupertino, Calif., announcing 200 new iOS 5 features and tight integration of the mobile OS and its cloud services. Although not as sexy as new hardware, state-of-the-art software and services such as iCloud and iOS 5 are key to Apple's future, enabling the tech giant to forge even stronger links with its customers.

"We believe compelling new capabilities in iOS 5 and iCloud will generate strong sales of iPhone 4S and increased iOS ecosystem stickiness to generate future recurring device sales," explained Michael Walkley, an analyst at Canaccord Genuity, in a note. "We believe a growing and loyal user base will result in strong devices sales and earnings growth for the next several years."

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It's also worth noting that Apple's smartphone business is hardly on the ropes; it's not as if the gadget maker needs the iPhone 5 to get back in the game. Indeed, Apple set a new quarterly record for iPhone sales during its recent third quarter results.

The iPhone 4S looks set to continue Apple's momentum, according to Charlie Wolf, an analyst at Needham and Co. "With the addition of Sprint in the U.S., possibly new international carriers and Verizon ( VZ) subscribers who postponed purchases of the iPhone until this launch, iPhone 4S should easily match our estimate of 27.5 million shipments in the December quarter," he noted.

Tellingly, more than 50% of the respondents to TheStreet's iPhone poll said that they can't wait to get their hands on the new iPhone 4S.

Many investors, though, are clearly perturbed by the absence of an iPhone 5. Apple's stock was down more than 2% in early trading on Wednesday, before rallying slightly.

Clearly, Apple's not getting the love it deserves, according to Goldman Sachs ( GS) analyst Bill Shope. "With iCloud, iOS 5 and the surprisingly intriguing Siri virtual assistant feature, we believe the market is underestimating the importance of Apple's latest platform enhancements," he explained. "We expect the shares to outperform in anticipation of a holiday season that should benefit from pent-up demand for the newly launched iPhone, iPad shipments that are unfettered by supply constraints, and substantial platform improvements such as iCloud."

Tim Cook may not have delivered what people expected on Tuesday, but the iPhone 4S and Apple's other announcements are hardly the end of the world. And remember -- we've still got the iPhone 5 to look forward to.

-- Written by James Rogers in New York.

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