Apple iPhone 4G: As Sales Begin, Will Extra G Lift the Stock?

The Apple iPhone 4G goes on sale Thursday, and investors apparently are expecting some whiz-bang for their buck. Apple's stock (AAPL) set an all-time high this week near $280 a share. As it hovers just below there, let's be good contrarians and think of what could go wrong and dash those sky-high expectations.

The iPhone 4G has some new and/or improved features that Steve Jobs, Apple's CEO, introduced earlier this month at the Worldwide Developers Conference, an annual conclave of iPhone application developers. The phone is thinner than its iPhone ancestors, there's more talk time, better picture quality, a gyroscope that is supposed to improve gaming and a fancier and front-facing camera that allows for video chat.

Some of these seem good on paper, but they're not exactly game changers. The most highly touted feature, video chat, actually sounds like a blast from the past.

Video telephony has been tried for around 30 years and has been a commercial dud for just as long. It's hard to envision it being a money spinner on a mobile device. Imagine the potential for injury or at least embarrassment when people try to do it while walking or driving.

Then there are the features that iPhone 4G doesn't have, something that has attracted criticism in the Geekosphere. Brian Mullock, author of a blog focusing on smart phones, points out in a recent post that iPhone 4G, like its predecessors, will not be compatible with Adobe's (ADBE) otherwise ubiquitous Flash player. There is no FM radio, either, or access to the Internet phone service provider Skype.

The iPhone 4G will continue to be available only on AT&T (T), which, nearly 130 years after Alexander Graham Bell invented the telephone and started the company, has a reputation for dropping mobile calls with disturbing regularity. Then there is the cost of the service, which is expected to be $120 a month plus either $199 or $299 for the phone itself.

Given what the iPhone 4G has and doesn't have, does it deserve the extra G or is it just another 3G sequel? As Wikipedia explains the dispensing of Gs, "the nomenclature of the generations generally refers to a change in the fundamental nature of the service." That doesn't seem to apply here.

A similar accusation was made more elliptically and humorously last year after Apple introduced the iPhone 3GS. Zak George, who describes himself as a "professional video blogger" in a self-deprecating, Ashton Kutcher sort of way, posted a video on YouTube of his efforts to sneak into a mall the morning the 3GS went on sale.

Apple may be the most innovative company anywhere, but the success of each device makes it harder to repeat with the one that comes after. As must-have features become already-haves, the ones on the new iterations become superfluous.

That's what George alludes to in his video. At the end, he praises his earlier-model iPhone and asks a reasonable question: "What do you guys think that the next iPhone will do, or any mobile device, that this one doesn't?" Apple and its shareholders had better hope that existing iPhone users don't ask the same question as they ponder whether to purchase a 4G.

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