As everybody's focused on Apple Inc. (NASDAQ: AAPL)'s "Let's Rock" event and the expected new iPod lineup, today Dow Jones reported that T-Mobile Czech Republic AS, a Czech unit of Deutsche Telekom's (NYSE: DT), said it has sold more than 5,000 iPhones since the launch on August 22.

I know, 5,000 does not sound too much, definitely not in the context of overall iPhone sales globally. And it's particularly disconcerting after a Weisel analyst lowered revenue and EPS estimates on Tuesday, writing that "Retail store checks indicate decelerating sales,'' and that "iPhone unit sales have slowed in the past two weeks.''

But let's not forget the Czech Republic has a population of 10 million, and that this number doesn't include sales from the other two major local competitors, Czech units of Telefonica SA (NYSE: TEF) and Vodafone Group Plc (NYSE: VOD), both of which would not disclose sales.

Rumors are all over the place that Apple (NASDAQ: AAPL) will upgrade the iPod to a home entertainment device, cut prices, or simply offer the product in more colors.

The company is expected to comment on the music player's future at a conference on September 9.

According to The New York Times, "An analyst at American Technology Research, Shaw Wu, said the iPod line needed to be refreshed and the price of its iPod Touch models needed to be cut because they have a higher starting price than the iPhone."

It is too bad that it is not that simple. Price cuts are not going to cause a big rise in iPod sales. It would be wrong to say that the number the digital music players sold is not growing at all, Apple moves about 10 million iPods a quarter but that is not likely to spike up because of a modest addition of new features. With over 150 million units already sold, the iPod is reaching a point of saturation.

Dropping prices is always a way to stimulate sales, but it also does big damage to margins, something that Apple shareholders do not want to hear. As for upgrading the product so that it can help manage home entertainment systems, that would put it in competition with a dozen other big companies trying to do the same thing.

The iPod's best years are behind it. Apple has to manage those expectations on Wall St. and hope that the iPhone sells like hot cakes.

Douglas A. McIntyre is an editor at 24/7 Wall St.

According to Moneyweb, software giant Microsoft (NASDAQ: MSFT) is hooking up with Jerry Seinfeld. No, they're not trying to revive the comedian's sitcom career (although that would be cool). It seems Microsoft is feeling a bit blah about its brand equity, so it's looking to initiate a hip advertising campaign that will tout the company's image and its powerful Windows Vista technology.

No doubt, the advertising campaign from Apple (NASDAQ: AAPL) that makes fun of the PC-Windows platform has a lot to do with it. I love those commercials, and I think it's about time Microsoft came to its senses and decided to do something serious to answer them. A campaign with Seinfeld, if done with a maximum amount of creative wit, will work wonders. But of course, that's the point -- it has to be done right. Seinfeld is a big name, and his presence carries a lot of weight with consumers.

Still, I have reservations about using him in an ad campaign. Am I the only one who wasn't impressed by his American Express commercials? I liked Seinfeld in his famous television show, but seeing him pitch charge cards didn't make me want to apply for one. I thought he was boring in the format.

Apparently, ad firm Crispin Porter + Bogusky will be doing the ads featuring Seinfeld, and they were the creative force behind the Burger King commercials with the creepy King mascot. Those commercials rock. It would be nice if the firm could do something as edgy with Seinfeld and Microsoft, but I'm not holding my breath. I'm not sure that kind of lightning could strike twice.

A recent article about one of Apple, Inc.'s (NASDAQ: AAPL) former engineering executives left me laughing quite a bit. Tim Bucher, who recently left Apple for Dell, Inc. (NASDAQ: DELL) after being accused by Apple CEO of being "manic depressive," is trying to throw a spear at his former company by trying to find a challenger to Apple's iTunes service with a quite-ambitious plan at Dell.

Instead of trying to create yet another online music and video ecosystem that syncs seamlessly with another round of boring Dell music devices, he's trying to create an industry-wide team of competitors to seriously challenge Apple's dominance in the iPod/iTunes marketplace. Notice I did not say "MP3/Music service" marketplace. Right now, it's all Apple in the digital music scene and has been for some time.

Consultant Rob Enderle says that Apple "locks you in" while Dell "locks you into choice." While opening up choice is great for consumers, history says that products and services become so fragmented and hard to use that they never reach critical mass. What Apple did with the iPod was to make the service that goes with it -- iTunes -- so easy to use that it quickly became the market leader. One brand, one service, simple to use.

It's true that many customers want freedom and choice in their music players and music download services so they can "mix and match" to their heart's content. Everyone else (yes, the majority) wants a solution as simple as a light switch. Flip it, and everything "just works." Good luck, Bucher and Dell, but to even come close to challenging Apple, your solution better be out of this world.

Apple (NASDAQ: AAPL) wants to get beyond AT&T (NYSE: T) outlets to sell its new iPhone. So, it will turn to consumer electronics giant Best Buy (NASDAQ: BBY).

The new distribution deal has significant risk. Part of the iPhone's appeal is that it is not as "easy" to get as other handsets. Apple and AT&T are the only sources for the device. To some extent, that makes it "special" in the consumer's mind.

Putting the iPhone into a large chain of stores that sell hundreds of devices including a large number of cellular handsets turns the iPhone into a bit of a commodity. While it may help sales some, it may take away part of the product's luster and its image as a superior handset product.

Broad distribution worked for the iPod. Whether it will be good for the iPhone's branding remains to be seen.

Douglas A. McIntyre is an editor at 247wallst.com.

Napster (NASDAQ: NAPS), a digital-music-download entity that competes with Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Wal-Mart (NYSE: WMT) and Yahoo! (NASDAQ: YHOO), cued up its Q1 numbers on Monday after the bell. The top line decreased 6% to $30.3 million. The bottom line showed a net loss of 10 cents per diluted share, same as last year's results. In fact, the company lost a dime per share in the previous quarter. Must be something special about that number. Anyway, according to Briefing.com, Napster missed Wall Street estimates by one penny.

Gross margin for the quarter was flat at 27% when comparing to year-over-year data, but it did represent an increase over the 26% gross margin from the previous quarter. That's got to count for something, right? No, it doesn't. Neither does the press release's promotion of the new MP3 initiative. I could care less. Napster is an equity trading at a very low price, it's racking up losses, and it'll never become a serious threat to Apple and the iPod/iTunes empire. A good investment this is not.

The stock was down 10% in yesterday's after-hours session. I'm not sure where it will close in the regular session today, but Napster isn't where I want to be. There are better ideas out there, Apple certainly being one of them. I know that the stock snapshot shows it has been strong in the last month or so, but I'm not inclined to read too much into that in this particular case. For me, it's about stock price (too low) and brand equity (not powerful enough). Apple and iTunes sing a much better song than Napster, in my opinion...

[Editor's note: At 8:12 a.m. NAPS shares traded 2.7% higher]

Disclosure: I don't own any company mentioned; positions can change at any time.

Dell (NASDAQ: DELL) may join the parade of companies that have taken a shot at taking multimedia player market share away from the Apple (NASDAQ: AAPL) iPod. The PC company may have a better chance than most.

According to The Wall Street Journal, "Launching the player -- along with an online download service and related software -- would be part of a strategy that Dell Chief Executive Michael Dell hopes will move the company into a broader range of consumer markets than it has served before."

The conventional argument is that Apple has over 150 million iPods sold and that its iTunes franchise may be the largest music download service in the world. By some measures, iTunes has 70% of the online digital music market.

Dell has one significant advantage over past challengers: it is already one of the largest online consumer electronics marketers in the world due to its prowess in the PC industry. In terms of revenue, Dell is over twice Apple's size and has an unusually strong balance sheet. It can afford to make a long-term push into digital music.

Dell will have to create its own music store, but based on the number of participants in the field, that should not be a high hurdle. Dell may also be able to use the huge online sites of some of its retail partners like Wal-Mart (NYSE: WMT) to market its new products.

Dell has long odds for picking up business from Apple, but not nearly as long as some other firms that have tried to move into the industry.

Douglas A. McIntyre is an editor at 247wallst.com.

Shares of Apple Inc. (NASDAQ: AAPL) have jumped after the New York Times reported that Chief Executive Steve Jobs has told associates that he is cancer free.

Concern about Jobs' health have kept Apple's shares depressed even as it faces soaring demand for the just released iPhone 3G. The company's reluctance to discuss the CEO's health during the recent earnings conference call only added to the speculation.

That's why the Times' report saying "in recent weeks, Mr. Jobs has reassured several people that he is doing well and that four years after a successful operation to treat a rare form of pancreatic cancer, he is cancer free" is so curious. Why didn't the company just say that when it released earnings? The question was bound to come up given how awful Jobs has looked during recent public appearances.

Of course, Apple's paranoia is legendary. It guards its secrets even more zealously than the CIA. Jobs decided that his health is no one's business even though as a CEO of a public company it is of material interest to shareholders. But the matter is still not closed entirely.

"People who are close to Mr. Jobs say that he had a surgical procedure this year to address a problem that was contributing to a loss of weight," the paper said, not offering any specifics. Investors' concern is understandable since according to a patient group, 75% of all pancreatic cancer patients die within the first year of diagnosis.

Jobs has defied the odds. Let's hope that actor Patrick Swayze does as well.

Apple Inc. (NASDAQ: AAPL) is reporting its fiscal third quarter financial results Monday, July 21, after the close. The question is not only what Apple will report, but also how the Street will react, and most important, is it a buy ahead of earnings?

In terms of numbers, according to Thompson Financial's survey of analysts, Apple is expected to report net income of $972.6 million, or $1.08 per share, on sales of $7.4 billion. That's an 18.9% profit growth and a 37% sales growth.

Investors will be interested in the following:

iPhone sales numbers for Q3 may not interest investors that much, as the new 3G iPhone was released in fiscal Q4, and that is expected to be the main driver of iPhone sales going forward. The launch, despite its technical glitches was very successful, but investors might be concerned over Apple's ability to supply the demand. Already German and many U.S. stores have experienced shortages.

The new Apple Inc. (NASDAQ: AAPL) iPhone is even a bigger hit than analysts had expected. During its debut weekend, about a million units of the phone that can do everything but your taxes were sold. This number is already higher than earlier estimates from today Doug McIntyre has posted. Even Apple's prickly Chief Executive Steve Jobs was impressed.

"iPhone 3G had a stunning opening weekend," he said in a press release issued this morning. " It took 74 days to sell the first one million original iPhones, so the new iPhone 3G is clearly off to a great start around the world."

Indeed, diehard geeks camped out and around Apple and AT&T Inc. (NYSE: T) stores to be among the first to get their hands on the sleek new phone. A 22-year-old college student from New Zealand named Jonny Gladwell was the first to purchase the mother of all gadgets. He waited outside his Vodafone store for 60 hours, according to Vnunet.com. His parents must be proud (or horrified).

What makes this even more amazing is that many Apple fans are fuming over technical glitches and shortages of the phone their lives will not be complete without. Gizmodo dubbed this the iPocalypse. Mitch Wagner of Information Week argues that Apple has got some fence-mending to do with customers who clearly expected better.

Sirius Satellite Radio, Inc. (NASDAQ: SIRI) laid out what it thought its financials would look like next year after a merger with XM Satellite Radio Holdings (NASDAQ: XMSR). The market wasn't impressed.

Sirius had an odd way of expressing how it would save money next year. According to the company, "Total synergies, net of the costs to achieve such synergies, for the combined company are expected to be approximately $400 million in 2009." The firm also said it expected positive free cash flow.

All of that good news sent Sirius down almost 9% to $1.91. Volume was heavy at over 35 million shares, so the selling turned into a stampede.

Sirius forgot to mention the one number that Wall St. really wants to see which is what it thinks the revenue for the merger company will hit for 2009. Without that, it is impossible to determine whether any of the cash flow numbers are believable.

Conceding that Apple Inc. (NASDAQ: AAPL)'s iPod will be the digital music player of choice for the foreseeable future, online music downloading service Rhapsody is rolling out a $50 million marketing effort to convince iPod users currently using iTunes to make the switch to Rhapsody. Partner sites include Yahoo, Verizon Wireless and iLike, and the downloads will be in the mp3 format so they can be played on iPods.

Rhapsody is a joint venture of Real Networks and Viacom, so it's one of the few online music providers that has the muscle to compete with Apple. But I doubt that they'll be able to. In just a few years, Apple has made itself the biggest seller of music in the country, and sales of music downloads grew about 35% in the most recent quarter, according to the company's 10-Q.

iTunes seems to be pretty entrenched, and I just can't see anything compelling coming from Rhapsody that would motivate anyone to switch from iTunes. Rhapsody vice president Neil Smith told Reuters that "We're no longer competing with iPod. We're embracing it."

But now they're competing with iTunes, and consumers seems to have overwhelmingly embraced that. You really have to question Rhapsody's -- and every other also-ran mp3 seller's -- reason for existing.

Rhapsody, a music download service owned by Real Networks (NASDAQ: RNWK) and Viacom (NYSE: VIA), will make yet another run at Apple Inc.'s (NASDAQ: AAPL) iTunes. According to Reuters, "Digital music seller Rhapsody is launching a $50 million marketing assault on Apple's iTunes, offering songs online and via partners including Yahoo Inc. (NASDAQ: YHOO) and Verizon Wireless."

Why the venture thinks it will have real success is anyone's guess. Downloading to Verizon Wireless phones is not exactly the kind of novelty that is likely to draw customers. The service will have one important new feature, though. Rhapsody subscribers have not been able to play their music on iTunes. Under the new push, that will change.

Memo to Rhapsody: The horse has already left the barn. Keeping the service off of the iPod for so long has helped iTunes move into a unassailable position.

Real Networks, which dominated the multimedia market with its Real Player from the late 1990s until about five years ago, was slaughtered by Apple when it offered a device coupled to a music store with the launch of the iPod.

There is no catching up now. The race is over.

Douglas A. McIntyre is an editor at 247wallst.com.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

Apple (NASDAQ: AAPL) is one of the great stories of corporate America and the stock market. Under the leadership and genius of Steven Jobs, Apple is emerging as the premier technology growth company of this decade and the next. In the past five years the stock has rocketed from $9 to the current $175, and yet the story is actually stronger than ever before.

Apple has three major legs of growth in its arsenal and a distribution system that is second to none. The products of Apple are both cool and revolutionary. The 2002 introduction of the iPod defined the MP3 player space. Apple has sold over 150 million units as of March 2008 and commands over 70% of the market share. Many iPod owners are on their 3rd and 4th units, so the actual penetration of addressable customers has been barely scratched. The newer versions include touch screen and of course can store up to 20,000 songs and numerous movies and pictures.

The Mac computer has been re-engineered these past couple of years and is now the rage of the personal computer market. The new Mac is beginning to enter the traditional enterprise sector while maintaining its dominance in the consumer sector. The Leopard operating system became available in mid-2007 to rave reviews. Apple is taking market share in the competitive personal computer sector while maintaining its pricing structure. The company doesn't compete on price but offers such superior functionality that buyers do not mind paying full retail price. The attendant software programs are also seeing a resurgence and also carry high margins.

I want to add Apple (NASDAQ: AAPL) to my portfolio. I've been thinking about it for a while. I blew the opportunity of the most recent pullback. But that's in the past. So, what should I do now?

I'm a little reticent about buying Apple at these levels. Why? Is it some fundamental reason? Some overly technical reason? Well, it's more the latter than the former, but to be quite honest, it's mostly a gut feeling. I'm worried that the stock is going to flounder around throughout the dog days of summer. Yesterday's closing price of $176.84 is comfortably away from the 52-week high of $202.96, and it is well above the 52-week low of $111.62. If the stock went back to its 52-week high by the end of the year, that would represent a double-digit gain. AOL Finance gives the stock a forward P/E ratio of 31. For a company like Apple, one that has excellent growth prospects ahead of it, that isn't bad.

As many have observed, this tech company, an arch competitor of Microsoft (NASDAQ: MSFT), is a cult stock. Not only does Apple have rabid fans eager to buy its iPod and iMac products, but it has an avid following for its shares. If Apple could just get one more big dip, I'd think seriously about buying in. As of now, I just can't bring myself to pull the trigger. Perhaps during the summer Apple will see a nice retreat from current levels, and it will be an interesting idea ahead of the Q4 holiday season. I will be keeping my eye on Apple.

Disclosure: I don't own any company mentioned here; positions can change at any time.