Apple Inc.'s (APPL) public relations staff deserves a medal for whipping the tech press into a frothy lather about today's "major update" to the iPhone and iPod Touch. Major media outlets ran largely laudatory stories about the upgrade while investors could care less.

Shares of the maker of the iPod and Mac were up about three percent before the announcement, a pretty typical move. Investors who have seen their shares fall 22 percent this year apparently were not impressed by features such as the ability to cut-and-paste text and turn-by-turn GPS directions. There was a yawn after the company announced a new iPod shuffle too.

Wall Street, which is worried about how the medical leave of CEO Steve Jobs would impact the company, are playing a game of wait-and-see with Apple. The update released today is not significant enough to cause people to buy an iPhone, said Rob Enderle, an independent technology analyst, in an interview.

"It's going to make their existing customers happy," he said. "You can see there is no real excitement around the announcement.'

Signs are emerging that smart phone sales are starting to slow, heightening pressure on Apple and its competitors. Gartner estimates that worldwide sales of smart phones were 38.1 million units in the fourth quarter of 2008, an increase of 3.7 percent over the same period in 2007. Quarter-to-quarter growth, though slowed.

Rival Palm Inc. (PALM) plans to release the Palm Pre, its rival smart phone to the iPhone, later this summer. Superlatives about the phone have been flowing from some bloggers like wine. Gizmodo called it "maybe the most important handset to be announced in two years." The hype is justified, according to Enderle.

"Apple should be incredibly worried," he said. "When Apple gets concerned they tend to get busy."

A new iPhone is expected at the same time as the Pre, Enderle said.


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