Apple hits milestone: 2 billion iPhone apps sold as Chinese market beckons

Apple (AAPL), the PC pioneer turned music and phone juggernaut, has sold 2 billion iPhone "apps," underscoring the widespread popularity of its signature smartphone and the mobile applications that run on it. Apple made the announcement the same day that China Unicom, the country's No. 2 wireless carrier, said the iPhone would go on sale this month for 5,000 yuan ($732.5).

But is everything smooth sailing for the good ship Apple now that Steve Jobs is back at the helm? Concerns over consumer demand this holiday season are justified. But here's a prediction: Apple, the perennial expectations down-player, will impress the market with its earnings later this month as the stock breaks through $200 per share.
So what if China's gross domestic product per capita is only about $6,000. There are plenty of wealthy Chinese plutocrats and others who have prospered from the Communist nation's steps toward a more free-enterprise-loving system to buy up iPhones. Apple shares closed at $186.16 Monday, up more than 2 percent amid more modest gains across indices.

For Apple, Monday's main agenda item was bragging about its App store.

"The rate of App Store downloads continues to accelerate with users downloading a staggering 2 billion apps in just over a year, including more than half a billion apps this quarter alone," Steve Jobs, Apple's CEO, said in a statement. "The App Store has reinvented what you can do with a mobile handheld device, and our users are clearly loving it."

What many users are clearly not loving, however, is the increasingly sketchy wireless service offered by AT&T (T), the exclusive iPhone provider, which has weathered weeks of abuse over its seeming inability to reliably connect cellphone calls or provide network service to many customers.

Of course, this is all AT&T's problem, right? Apple simply designs and produces technological works of art, like the iPhone. Getting the device to work properly on a mobile network is someone else's problem, namely AT&T's -- or perhaps more likely, yours. But no matter, as many have noted, AT&T's iPhone exclusivity can't last forever, so consumers can look forward to using their iPhones with Verizon (VZ) or perhaps Sprint (S) -- someday.

But what does iPhone service quality matter when there are 2 billion iPhone apps sold to celebrate? The company is now distributing iPhone apps at a rate of over 6 million per day, blowing away the competition in mobile applications (to the extent it has any,) according to Peter Kafka, who estimates that the company is seeing $720 million in annual iPhone app sales. The company boasted of offering 85,000 apps to more than 50 million iPhone and iPod touch customers.

Apple's iPhone app-strutting comes as the company has rolled out a new TV advertising campaign touting its App Store and featuring applications ranging from Pizza Hut to AOL's DailyFinance.com, the site you're reading now. (Enter now to win a free iPod Touch!)

Meanwhile, a new Financial Accounting Standards Board rule change is expected to be so favorable to Apple that Piper Jaffray analyst Gene Munster has raised his 12-month price target for the company's stock to $235 from $186. The rule change will allow Apple to account for iPhone sales in the quarter in which they actually happen instead of over a two-year period, and will boost Apple's earnings per share by about 44 percent in 2009 and 48 percent in 2011, according to Munster.

We'll see you on the other side of $200.

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