This is not coincidental.

A couple days ago I wrote that Apple continues to be undervalued because analysts continue to view it as a hardware company and do not understand that just as Amazon is a "platform" and Google is a "platform" and Facebook is a "platform" -- which is extremely difficult to unseat -- so too the iPhone is a platform.

And this notion of a platform is what confuses so many -- including institutional investors and Big Money that ought to know better. This confused notion of the platform is also why $AAPL trades at such a relatively low P/E, particularly compared to Google and to Amazon (and to Facebook in time).

Money believes that if you control the platform, then you effectively own the market. Google believes this. They build out their server farms and pour billions into Android and offer more and more free services, like email, hotel listings, video, videochat and more not just to profit off your personal data. Just as important, possibly more so, is that they ensure that everything collapses inside their platform, which they own, they control and which they -- almost exclusively -- profit from.

Same with eBay.

Same with Amazon. Amazon is yet another closed walled garden web "platform" that opens itself up only enough to make sure that anything that is sold goes through their platform.

Investors have believed fervently in the notion of the digital web platform for two decades now. The platform is the network, in their view, and owning the network generates greater value and more revenues with each and every new participant. The platform, then, becomes its own de facto market -- and monopoly.

This is why Amazon has a P/E of an astonishing $135. It's why Google has a P/E of $20. 

And it's why $AAPL has a lowly P/E of $13.

Because Apple has no platform. Apple is a hardware company. 

But what if this is no longer the case?

What if the iPhone is the network? What if the iPhone is the platform?

What if the iPhone is able to deliver the uber-high though temporal profit margins found in leading hardware but sustains them -- even grows them -- because it is also the platform?

If so, iPhone alone could become a trillion dollar business in just a few years, as more and more of the world joins this "network". 

The idea is not crazy. 

Would Path exist without iPhone? Would Instagram exist without iPhone? How few would ever use Evernote? Of all the hundreds of millions of Android devices in use around the world, *most* Google mobile searches come via the iPhone. More and more shopping is taking place via the iPhone and iPad.

It is not necessarily because iPhone is so much better than any other piece of hardware on the market. The iPhone is becoming the platform -- for everything mobile and social.

Now what do we have here, just days later?

Well known Sanford Bernstein analyst Toni Sacconaghi magically declares iPhone "a platform". And states that to determine Apple's true value, we must view iPhone as..."a platform".

Investors worry that Apple’s business is so heavily predicated on sales of the iPhone — the source of almost 2/3 of profits — that the company is at risk of being pushed aside at some point if it ever turns out a Razr-like flop.

“However, we believe that rather than being a transactional company with volatile revenues, Apple is a platform company with stable, almost annuity-like revenue streams, driven by strong user lock-in,” writes Sacconaghi.

The apps and other content that go into Apple’s i-devices give it 90% or greater customer repurchase rates, he notes, with an implied “annual churn” for the iPhone customer base of less than 5%, which is “far better than the 15%+ reported for most cable/telco companies,” he observes.

The upshot, he says, is customer loyalty, as proven by anecdotal carrier remarks that iPhone subs stay customers of telco plans longer than most cell phone users.

Sacconaghi computes the “lifetime value” of an Apple iPhone customer at $700 to $900, $600 to $650 for the Mac, and $275 to $300 for the persona who buys an iPad.  

You are welcome, Ms Sacconaghi.

According to my US-based App Store data, the top 5 (at least ) paid, free and grossing apps are curently all games. Pretty impressive when you consider that iPhone -- as a gaming 'console' -- will only get better as games allow for easy, ad-hoc group competitions, offer more and better games integrated between iPhone and iPad, iPhone and OMG iTV.

Seems as if everything content is collapsing inside the Apple ecosystem.

Via the Linley Group:

Our previous coverage of Apple’s custom-design A5 processor pointed out that the die size of the processor is much larger than that of competing application processors. We speculated that Apple included some custom logic to improve the performance of its products.

A recent S-1 filing from Audience confirmed this speculation and explains exactly what that custom logic does. For those unfamiliar with the company, Audience has developed impressive technology that removes most or all of the background noise when someone places a cell-phone call from a restaurant, airport, or other noisy location. The company initially offered this technology in a small chip, which Apple included in the iPhone 4, generating sizable revenue for the startup.

To reduce system cost and eliminate the extra package required for the Audience chip, Apple cut a deal to integrate the noise-reduction technology directly into its A5 processor, which appears in the iPhone 4S. This technology is critical for the new phone because not only does it improve call quality, it blocks out background noise when users provide voice commands to Siri, the intelligent assistant built into the iPhone 4S. Without this noise reduction, Siri would be unusable even with a modest amount of background noise.

This situation helps explain why Apple does not offer Siri as a software upgrade on the iPhone 4. 

What if "to Google" you required a Google device? Not a Google approved device, but a Google (only) device? What if to purchase from Amazon or eBay you needed a device from these companies, only?

Facebook has 800 million users. What if to use Facebook, to share and like and update and upload, you had to use a branded and controlled piece of hardware from Facebook?

The idea is not so far fetched. Indeed, we seem to be moving quickly toward just such a world. Think Kindle. Google's acquisition of Motorola. The mythical Facebook Fone.

Of course, bloggers, analysts and wannabes consider such hardware devices as, ironically enough, peripherals. A supplement to the core business. And for Google and Amazon and Facebook in particular, the core business is the same: platform.

On the Internet, nobody knows if you're a real business if you don't own a platform.

And this notion of a platform is what confuses so many -- including institutional investors and Big Money that ought to know better. This confused notion of the platform is also why $AAPL trades at such a relatively low P/E, particularly compared to Google and to Amazon (and to Facebook in time).

Money believes that if you control the platform, then you effectively own the market. Google believes this. They build out their server farms and pour billions into Android and offer more and more free services, like email, hotel listings, video, videochat and more not just to profit off your personal data. Just as important, possibly more so, is that they ensure that everything collapses inside their platform, which they own, they control and which they -- almost exclusively -- profit from.

Same with eBay.

Same with Amazon. Amazon is yet another closed walled garden web "platform" that opens itself up only enough to make sure that anything that is sold goes through their platform.

Investors have believed fervently in the notion of the digital web platform for two decades now. The platform is the network, in their view, and owning the network generates greater value and more revenues with each and every new participant. The platform, then, becomes its own de facto market -- and monopoly.

This is why Amazon has a P/E of an astonishing $135. It's why Google has a P/E of $20. 

And it's why $AAPL has a lowly P/E of $13.

Because Apple has no platform. Apple is a hardware company. Despite the fact that Apple is the biggest tech company in the world and earns the most profits of any tech company, and has managed to hold onto shockingly lucrative profit margins on its products for years and years, analysts remain convinced that such profits will eventually collapse.

Not simply because hardware profits are not sustainable. Not simply because so much money is at stake that other highly capable companies, like Samsung, Nokia, Microsoft, Facebook and Google will do everything in their power to copy Apple, limit Apple and in every way possible snatch some of those sales and profits. Rather, the notion remains fixed within the brains of even the smartest investors that hardware, per se, is not a platform. Hardware is not a network.

The idea of the "network effect" originated with the old phone companies, such as AT&T. Each new customer exponentially increased the value of the network. It was not that one more customer had a phone -- a piece of hardware. Rather, it was that one more customer, with their new phone, was now accessing and participating in the network; the platform.

But what if this is no longer the case?

What if the iPhone is the network? What if the iPhone is the platform?

What if the iPhone is able to deliver the uber-high though temporal profit margins found in leading hardware but sustains them -- even grows them -- because it is also the platform?

If so, iPhone alone could become a trillion dollar business in just a few years, as more and more of the world joins this "network". 

The idea is not crazy. 

Would Path exist without iPhone? Would Instagram exist without iPhone? How few would ever use Evernote? Of all the hundreds of millions of Android devices in use around the world, *most* Google mobile searches come via the iPhone. More and more shopping is taking place via the iPhone and iPad.

It is not necessarily because iPhone is so much better than any other piece of hardware on the market. The iPhone is becoming the platform -- for everything mobile and social.

Facebook is growing increasingly dependent upon iPhone users. Same with Twitter.

If the iPhone is hardware than no doubt its profit margins will be forced to come down, and soon. But it may not be just hardware. The iPhone may be its own platform, its own network. If so, $AAPL is likely to explode. And everything you think about the web is inside out.

Earlier today, I asked if the iPhone ASP (average sale price) is sustainable given how much more it is than the entire mobile industry and other smartphones. Even next highest, HTC, is nowhere near Apple.

Apple analyst, Turley Muller, offers his thoughts:

Apple's ASP in this calculation is somewhat overstated for comparison purposes. Apple's ASP is $300 higher than HTC, but it's actually less for specific device comparisons. 

Apple stopped breaking out the device ASP and reports iPhone accessories, services, and carrier payments lumped together in iPhone revenue. That probably adds $40 - $50 to ASP carrying huge margins. No other vendor offers higher memory models at higher price points.

Less than a handful of other smartphones cost more than $200 subsidized, and Apple has $300 & $400 options. But if we try to compare ASP's for similar devices, Apple's wholesale ASP is probably $200 more than similar handsets. Carriers absorb most of the price differential with higher iPhone subsidies, thus iPhone retail prices (with contract) are roughly inline for similar handsets. Some argue that carriers will stop paying such high subsidies relative to competing devices. Originally, it was impossible to sell data plans for devices other than iPhone. Web experience on RIM & MSFT was inexcusable. Hard to sell data when you can't even use it. iPhone propelled the average customer into a data user.

iPhone ARPU's were about double AT&T's average. Thus, it makes sense to shell out higher subsidies.Now that Android has copied iPhone experience, carriers can sell data plans with lower subsidies.

People now argue why should carriers pay more for iPhone is the revenue generated is the same. What they don't consider is the higher costs associated with non-iPhone devices. Apple handles advertising, distribution, tech support/warranty replacement

Plus, Apple is selling providers' service through its own retail stores & online, which generates some of the highest traffic. How much does it cost carriers to handle support for the dozen new Android devices that come out each week? For training/support ? Setting up display & promotional materials? Android version updates on numerous devices? Heavy discounting needed to clear inventory of couple month old Android devices? Other handset vendors, especially HTC & Samsung do nothing more than sell devices to the carriers. That is their customer.

Carriers take on the responsibility & risk of selling the devices. To the carriers, handsets are just a tool to sell you their service, hence the upfront subsidies. Apple changed the paradigm. Wireless service is just a tool for selling iPhones. People prefer to buy device and service plan at the same time & at one place. It's also imperative for receiving discounted hardware prices. Before the iPhone, nobody chose wireless service based on what phones were available. First, the offerings were nearly ubitiqous across all carriers, and second, no phone was that much better or captivating for the actual device to matter. Service quality/coverage & price were all that mattered. Carriers gained significant leverage over handset vendors because they were the gatekeeper to end users and had many vendors to choose from. To gain access to VZ & AT&T 100M subs, hardware vendors have only one option.

The iPhone demonstrated its powerful effect on carriers. Non-iPhone carriers saw many subs defect to AT&T for iPhone. AT&T sub additions increased and churn decreased.

The power of the iPhone to attract & retain customers is indisputable. AT&T gained a huge advantage being the exclusive iPhone provider. Other carriers witnessed the disadvantage placed on them. While iPhone provides less of an advantage to a specific carrier as more of its competitors offer it, the disadvantage of not having iPhone increases. Carriers have no choice but to carry it. If they don't agree to Apple's terms & pricing, then no iPhone. That means that carrier has nearly zero chance to attract the 30M+ current US iPhone users and millions more potential future iPhone users. In addition, customer defections will be higher.

This chart from Benedict Evans (awesome name!) via Gruber is striking:

Apple's iPhone ASP (average sale price) is over $600! No one else is close. No one else even receives over $400.

Caveat: this represents the "mobile handset" market. Apple has no "mobile" phone, only smartphones. Nokia, for example, and Samsung make millions of feature phones and these generate very low ASPs.

But before you decide if iPhone's ASP is sustainable, remember also:

• as feature phones are replaced for iPhones, we can expect iPhone shipments to increase dramatically
• Android devices are already available at very low prices so even though feature phone companies are migrating to smartphones, their ASP may not necessarily grow as much as they hope
• Apple has long maintained very healthy profits on devices that have been on the market for years
• Apple delivers value not only to its end user customers, but also to the carriers that offer iPhone, which further protects their ASP

The LA Times thinks that Apple could soon sell as many iPhones in China as it sells in the rest of the world. 

Apple sold 72 million iPhones in its fiscal 2011, a staggering number that required all the muscle of the world's most valuable technology company, as well as a network of Asian factories pumping out the devices at a breakneck pace. The sales came from more than 100 countries.

Now Chinese consumers may want to buy nearly that many iPhones all by themselves.

That may well happen, says Morgan Stanley analyst Katy Huberty, who in a note to investors guessed that Apple may soon be selling 57 million iPhones annually in China, capturing 60% of the projected market for smartphone buyers there. That would be a sixfold increase from the 10 million iPhones Chinese consumers bought in 2011. 

The pent-up demand for the iPhone in China is hard to overestimate. The nation's leading carrier, China Mobile, has 650 million mobile subscribers, according to Huberty (compared with about 200 million for second-place China Unicom, which offers the iPhone). China Mobile does not technically support the iPhone because its network isn't compatible. But that hasn't stopped 10 million of its customers from finding ways to use the device anyway.

I wonder if Apple will soon need to build "Foxconn's" in every region of the world where it sells more than, say, 10 million iPhones? One in Mexico, one in Brazil, one in, let's say, Portugal.

Not sure there are enough Chinese to go around. Or if Apple wants to become so utterly dependent on one company, one country, one government.

The haters will tell you that "Apple is a marketing company!" We hear that Apple users are eager to be part of a cult. And always...that bloggers just write about Apple.

All false.

In fact, we are probably not writing enough about Apple or the iPhone.

Yes, in light of Apple's record breaking-destroying-shattering-smashing historic quarterly earnings that were revealed yesterday, everywhere on the web will likely be inundated with all things Apple.

Such as this from The Big Picture:

• Apple reclaimed the title of the world’s most valuable company $415B vs Exxon Mobil’s $413B

• The $97.6 billion in cash that $AAPL has is higher than the market value of $448 of the companies in the S&P 500. (Capital IQ)

• This was the 2nd highest profit quarter of any company ever. ExxonMobil’s Q3 08 profit of $14.8 billion needed $147 barrel oil and $140 billion in revenue. (WSJ)

• Sales rose 73% to $46.3 billion — so much for the law of big numbers working against them (Golson)

• In 2009, Apple sold more iPhones than it did in 2007 and 2008 combined. In 2010, Apple sold more iPhones than it did in 2007, 2008, and 2009 combined. Last year, Apple sold 93.1 million iPhones, slightly more than it did in in 2007, 2008, 2009, and 2010 combined (Matt Richman)

• Apple’s profit of $13.1 billion was equal to their revenue in Q4 2010

• If Apple was a country, its market cap would make it 29th biggest nation, its annual revenue would make it the 52nd, its cash position 66th, and its earnings 79th, in terms of GDP  (Global Macro Monitor)

• Apple’s profits ($13 billion) exceeded Google’s entire revenue ($10.6 billion)  (Manjoo)

• Google would activate 59,653,187 Android-based devices during Apple’s fourth calendar quarter. Apple has said that iPod touch sales make up more than half of all iPod sales. That means Apple sold at least 7.7 million iPod touches. And that number, plus 37.04 million iPhones and 15.43 million iPads, means iOS outsold Android last quarter. (Matt Richman)

• Apple sold three times as many iPads as Amazon sold Kindle Fires (Tech Crunch)

Thing is, when you look at the trends, we probably aren't talking about Apple enough and are, in fact, spending too much time talking about Windows Phone, Samsung, Android et al.

I looked at the Google Trends over the past 30 days for iPhone and its accepted competitors. The trend is clear: iPhone destroys the competition when it comes to people searching. It's not even close, dear reader. But on the "news" side, where humans are writing and posting about iPhone and its competitors, it's much closer.

That means...we're actually giving too much love, time and focus to iPhone's competition. Customers, however, aren't swayed. They want iPhone.

Despite what I've written, apparently no one is searching for the Nokia Lumia nor is anyone writing about it. Time for Microsoft to crank up the marketing spend.

Android vs iPhone! That is what the News trend (at bottom) reveals. We write just as much about Android as iPhone. As far as (potential customer) searches go, however, it's not even close (top trend line).

Again, Microsoft needs to put big money into Windows Phone marketing.  

I ran trends for both Samsung and Samsung Galaxy. Not much difference. iPhone is crushing it.