Whew. Apple (formerly “Computer”) Inc. has managed to surprise almost everyone. Yesterday I sat up late reading comments and analyses, and there’s a bewildering array of information (and FUD) out there – and we’ve seen only the tip of the iceberg yet.

First of all, there was no mention of the options issue, although Steve Jobs touched on it briefly in a TV interview afterwards, saying he was confident that it’s not an issue anymore. Investors seem to agree; AAPL stock soared over 7% during the day and gained a little more after hours. As the owner of a modest few shares, I’m very happy. Also, Jobs looked healthy and fit, and no mention was made of health issues or resigning/retiring, and we’ll hopefully hear no more of that. I guess he looked haggard lately because of all that secret twiddling away on the iPhone design…

My personal predictions didn’t fare well on the whole. Of course, like everybody I thought it’d be a Macworld (note lowercase “w”, sorry, must be some ReFlex to write “W” there) keynote, but it turned out to be an Appleworld keynote. So, no Mac news, no Leopard news, no iApps news, no .mac news. Except indirectly, which is of course also significant. Many people were disappointed with this, of course, and if I wanted to be superficial I could say so too; after all, here are two devices I’d never use myself (a phone and a weird TV interface thing), and my pet subjects weren’t even mentioned. A third device, the revamped Airport Extreme, didn’t rate a keynote mention; neither did the 24% price drop on the Airport Express; the general migration to 802.11n was glossed over very briefly.

On the software development front, there’s nothing new either; the only exception is a new document called “Introducing Dashcode“. No new Leopard seed.

So why all the uproar over a couple of consumer electronics items which should have been introduced at the neighboring circus, the CES? And where’s the Mac news?

I’m declaring myself disqualified to write much about the i, oops, AppleTV. As I’ve said before, I don’t watch TV much, and of course all the stuff like the iTunes store, or even PVRs, aren’t available here – and they’d probably sink fast if they depended on me as a customer – I don’t need or want to be “entertained” the whole day, or even at all when I’m home. To me the AppleTV looks like a huge non-portable iPod without a screen, and that’s it.

The iPhone looks a little more interesting, and I might even look into buying a second or third generation version of it. If it truly does have GPS, as some say (others say it uses less precise cellphone-based localization techniques), it will be very useful for trips. Even so, it remains to be seen how the service side of that will work out. Currently the iPhone is tied to a single service (Cingular), it won’t be out until middle of the year and the operating costs haven’t been disclosed, so it’s pretty much a limited-application, US-centric device, and will remain so until 2008 or even 2009. So I won’t talk much about the phone aspect either.

But when you look at the whole picture, it becomes much more interesting. If it were just a cellphone with a built-in iPod (or vice-versa), even Steve Jobs would have been hard put to spend nearly two hours demonstrating it. On the contrary, we really saw just the highlights, there was very little hard technical information, and the implications are far-reaching. Let me touch on some of those in no particular order.

The iPhone runs “OS X” (note the missing “Mac” in there). Yes, it’s an embedded version of Mac OS X, and it’s stripped-down to fit on the device. All the major stuff seems to be in there – generic application support (at least as far as Cocoa, WebKit and networking are concerned), high-end graphics support or a works-well-enough fake thereof, and of course a cutting-edge user interface. How much did they strip out? Details will have to wait until June, I’d say. Not even the exact processor type is known; people tell me an Intel processor was mentioned during the keynote, but Intel makes a huge range of embedded CPUs, ranging from legacy 80186s to brand-new Core 2 Duos. There’s also a huge range of supporting chipsets available. I suppose it uses an integrated GPU with some OpenGL support, but it needn’t be too powerful, since we’re talking about a comparatively tiny 320×480 screen here. I also wouldn’t be surprised if it used some as-yet-unreleased Intel chip.

Still on the hardware, the iPhone will come in 4GB and 8GB varieties. Of course they’re talking about the flash memory capacity here (or is it a tiny hard drive?), and no mention is made of built-in RAM and boot ROM. I suppose RAM needn’t be too large – 256MB sound good to me. For comparison, I believe the iPods have 32MB. The OS and the applications would be stored, probably in compressed form, along with the songs/pictures/videos, but it wouldn’t use more than 10% of that. As with the CPU, Apple has been careful not to talk about exact capacities.

So will Leopard be officially released as “OS X 10.5”? Well possible. It seems safe to say that the iPhone OS is some sort of “Leopard Lite”. The user interface looks like the Finder has been stripped out and Dashboard put in its place, with every widget running maximized (to coin a term ). In fact, Steve Jobs showed that widgets are supported, which makes sense. Widgets run off JavaScript and WebKit, with lots of underlying Cocoa help, so they’re relatively lightweight. Even Safari and Mail could be turned into widgets once you put more direct support for their UI into Cocoa, so I presume that’s what Apple did. So is the recent release of the Dashcode beta a coincidence? Time will tell… for now, no word on whether Apple will allow random developers to do iPhone apps, or whether there’ll be an invitation-only selection process like they’re doing with iPod games. This year’s WWDC promises to be even huger than the last two, mark my words; I certainly intend to be there. Estimates of Leopard’s actual release date vary wildly from February to June, although April/May was my personal bet before the keynote; now, my feeling is Leopard and the iPhone will be released on the same day. Perhaps around the end of May; delivering early is part of the new Apple not-only-computer philosophy.

You’d think the rumors of a Tablet Mac would have died by now, but people are still calling for one. But the iPhone is sort of a Tablet Mac; I can well envision a second or third-generation device with a 9″ or 10″ screen, and a more mature gestural interface. This would need more advanced screen and battery technology than what we have on the market now, but next year it’ll be another story. Would Apple just turn the screen around on a MacBook and require users to use a stylus, or keep the current UI which is designed for a mouse+keyboard interface? Of course not; that’s why current Windows-based tablets remain a niche product. The new multi-touch UI looks just like what the doctor ordered.

My feeling is that the whole gestural interface, multi-touch screen, animation-centered philosophy will percolate back into mainstream OS X/Leopard and that what we’ve actually seen was a preview of one UI mode in Leopard; perhaps the Simple Finder/kiddie mode, at the very least the Dashboard interface. Why did the Finder seen at the WWDC Leopard preview look just like the ho-hum old one? Perhaps it’s destined to be an optional install for traditionalists. At this point I think we should try to extrapolate what the iPhone interface would look like on a large screen. Imagine the entire palm rest on a MacBook turned into a multi-touch interface. Optional keyboard? I doubt even Apple could pull that off, but it’s not impossible.

Looking back at Apple’s recent patent filings much of what we’ve seen was already revealed, especially the multi-touch part. Is the iPhone really made of that radio-transparent ceramic, and is that the secret of the supposedly smudge-free surface? If so, a larger tablet version is just a matter of time. One item which stayed in the labs was the screen-as-camera patent; that might be the reason the iPhone doesn’t (yet) have a second camera in front for video chatting.

No new iPods were announced for a good reason: the iPhone now is the high-end iPod. Look for future iPods, except for the screenless ones like the shuffle, to become iPhone Lites; at first in styling, later in hardware platform.

Regarding market share, Apple is looking for 1% of the global cellphone market next year, which seems to mean 10 million devices sold. However, as with the original iPod, that’s not the right point of view. The iPhone competes more with the current “smart” phones, of which 6.5 million were sold last year. Even supposing those figures don’t change, and nobody migrates to the iPhone, it still seems reasonable to assume Apple will capture half or more of that market. I suppose the competitors are already tearing their hair out at this point. Read Bill Gates’ CES keynote transcript just a day before for some chuckles:

…mobile phones. This is an area where we’ve made tremendous progress. This year we have some of the hottest selling phones in the marketplace, and the cool thing for me about those phones is it’s not just about phone calls, although we do that great, it’s not even just about e-mail, since that was the next round of things people wanted to be able to do, but it’s also about IMs, it’s about movies, it’s about TV, it’s about music, it’s about connected entertainment on my phone.

So the features we’re delivering in these exciting products are bringing that to market. If you think about Cingular’s Blackjack from Samsung, Cingular’s Treo from Palm, the T-Mobile Dash from HTC, and Verizon’s Motorola Q, those four alone are leading, cutting edge designs that are driving tremendous market share advances for Windows Mobile…

Talk about instant obsolescence…

I known there’s much more to talk about, but this post is already too long. The upside is, we’re looking at lots of “special events” over the next months, each (hopefullly) with its own little stock boost.