“Despite increasing smartphone competition, Palm can maintain differentiation and remains well-positioned to launch its products with multiple new Tier-1 carriers in early 2010 by which time it should have a robust apps catalog,” Arya wrote. “While we expect the stock to remain volatile, the recent sell-off creates an interesting buying opportunity, in our opinion, for a company with an attractive platform, selling into a high-growth market, and at a compelling valuation.”

Interestingly, Arya notes that Palm’s webOS application ecosystem, initially something of a disappointment, is growing a bit more rapidly these days with between 50 and 100 apps being added to Palm’s App Catalog each week. He expects growth to continue with the debut of a new feature enabling customers to download apps simply by clicking on a URL. Arya believes this will dramatically improve discovery of apps and attract more attention from developers. His conclusion: With a more robust App Catalog and two attractive handsets, Palm is well-positioned to launch its webOS line with multiple new Tier-1 carriers like Verizon (VZ) in early 2010.

There is “no sign of the sort of sellout reception that greeted the smart phone at its introduction in other countries,” The Wall Street Journal reported, adding that there were no lines for the iPhone at the Apple store in Beijing, the company’s only location in China.

Sounds like a lackluster launch, and with Apple (AAPL) and China Unicom, the only carrier authorized to sell the device in the country, declining to disclose sales figures, it’s difficult to argue that it was otherwise. It clearly wasn’t the rousing success to which we’ve become accustomed. That said, it probably wasn’t quite the bust it’s been made out to be, either.

Why? Well, consider this: There were launch ceremonies in 30 provinces. To date, we’ve heard anecdotal reports from–as best I can tell–one of them. And while it’s admittedly concerning to learn that a China Unicom store in Beijing sold just 10 iPhones last Saturday, that’s just one store. The device was on sale in many, many others (1000, according to Apple COO Tim Cook) across 30 provinces and 285 Chinese cities in a nation with 710 million mobile-phone subscribers.

Finally, while it’s true that the prices Apple and China Unicom are charging for the iPhone are heady, they’re not quite as bad as we’ve been led to believe. “I think the western media has misconstrued the iPhone pricing in China,” Dan Butterfield, editor of iPhonAsia told me.

“Nine out of 10 reports that I’ve seen have simply repeated the ‘too expensive’ mantra,” Butterfield explained. “They then quote the contract free price point–4,999 yuan ($730) to 6,999 yuan ($1,025) for the iPhone 3GS. They argue that you can buy a gray-market iPhone cheaper and it has WiFi….The truth…the gray-market price is marginally cheaper for those who want to go ‘prepaid.’ But when you examine the full matrix of China Unicom price/plans, you quickly realize that you can save big by going on contract vs. prepaid (pay as you go). There are even four price/plans where your iPhone if free. The iPhone subsidy increases for those who opt for more expensive monthly plans.”

Butterfield elaborates: “Moreover, if you want to access ‘3G,’ there is no good carrier option other than China Unicom. You can run at 2G speeds on China Mobile or China Telecom. But neither of these two networks support the chipset in iPhone. China Mobile runs TDSCDMA 3G and China Telecom runs CDMA2000 3G. So you are left with China Unicom’s WCDMA 3G–a world-standard 3G protocol fully supported by iPhone 3G/3GS. Why not go on contract and get a subsidized iPhone that is well below the ‘too expensive’ (contract free) prices that the media is shouting about?”

And in the end, does it even matter? As Butterfield noted, an iPhone sale is an iPhone sale–whether it’s made by a gray-market vendor or an authorized one. And either way, it’s good for Apple.

So was the iPhone’s launch in China really a bust? “Probably not,” said Butterfield. “Was it a rousing success? Probably not. The truth is somewhere in the middle.”

UPDATE: Well what do you know: China Unicom just coughed up some first weekend sales numbers for the iPhone and … well, they’re not much to look. The carrier sold just 5,000.

Consider these metrics:

Of the teens Piper Jaffray surveyed,

• 15 percent own iPhones (up from eight percent six months ago)
• 22 percent plan to buy an iPhone in the next six months
• 87 percent own iPods (up from 86 percent six months ago)
• 93 percent of the 40 percent who legally purchase music online use iTunes

Music to Apple’s (AAPL) ears, right? “Apple’s dominance in the CE and online music markets is going seemingly unchecked, capped by market saturation for iPod and iTunes usage,” Piper Jaffray analyst Gene Munster writes in his analysis.

“Also, interest in the iPhone remains high…We believe the $99 iPhone 3G has been a meaningful part of share gains in the last six months. Previously, teens were indicating that the plan pricing and handset pricing were too high for them (and their parents) to buy iPhones. The lower pricing appears to have been a catalyst for share gains. Also, the popularity of the App Store and the quality of games available for the iPhone have likely led to the gains among the teen demographic in recent months.”

Munster’s conclusion: “Apple is taking its leading position in music and mobile markets.”

And it continues to sell well. While Leopard and Tiger sales declined more than 60 percent after their first week at market, sales of Snow Leopard have only declined 25 percent in the two weeks it’s been available.

“Even though some considered Snow Leopard to be less feature-focused than the releases of Leopard or Tiger, the ease of upgrading to Snow Leopard and the affordable pricing made it a win-win for Apple computer owners–thus helping to push sales to record numbers,” NPD’s Stephen Baker said in an announcement.

“With pricing reduced by more than $100 for both the single-user and five-user pack versus Leopard pricing,” Baker added, “Apple has clearly demonstrated that aggressive pricing policies in this economic environment generate an outstanding consumer response.”

In a research note issued earlier this summer, Piper Jaffray analyst Gene Munster estimated that Apple (AAPL) would sell about five million copies of Snow Leopard in the quarter in which it was launched. And while that number might have seemed optimistic at the time, it’s looking increasingly more reasonable. Leopard, as you might recall, sold more than two million copies its first weekend at market. If Snow Leopard is selling twice as quickly, Apple should have no trouble hitting Munster’s target and perhaps even passing it.

Among those doing so today: Morgan Stanley’s Kathryn Huberty, who lifted hers to $180 from $105, arguing that iPhone demand through 2010 is being underestimated by the market and will help drive Apple’s stock value up. “We believe Apple is emerging as the clear leader in the battle over the mobile Internet,” Huberty wrote in a research note to clients, adding that some future pricing adjustments will only solidify that position. “We expect a price cut to the current generation iPhone to drive 50 percent to 100 percent (two million to four million units) incremental unit demand,” she said. “Our survey data suggests 15 percent plus of the iPhone installed base typically upgrade to a new phone.”

A bullish call, especially for Huberty, whose opinion of Apple has historically been mercurial at best. Shares of Apple (AAPL) rose five percent to $128.60 in early trading this morning.

Tempering Huberty’s exuberant pronouncements today is Global Equities Research analyst Trip Chowdhry, who tells Reuters that the iPhone will suffer a bit at the hands of the Palm (PALM) Pre, which is scheduled to arrive at market on June 6. “Investors should not think the upcoming version of iPhone 3 is going to be as successful as iPhone 2.0 because it will have solid competition from Palm Pre, developed by ex-Apple designer Jon Rubinstein,” Chowdhry said. “Palm Pre has a superior operating system than iPhone. It runs on a better network–Sprint CDMA-versus iPhone which runs on GSM.”

The first: Palm, as was rumored, is expanding its early-access program for Mojo, the WebOS SDK. The second: The company is introducing a new set of integrated cloud services, called Mojo Messaging Service, for developers. From the official announcement:

“The Mojo Messaging Service is an elegant, standards-based way to exchange information over the Internet. When new information is available, it is ‘published’ to the cloud and all interested parties who are subscribers are notified that new information is available. This will allow developers to push live content to their applications or services. The Mojo Messaging Service initially will have a limited feature set and service level that will evolve over time.”

And the third, as was also rumored: Developer MotionApps has written an emulator called Classic for the Pre that will allow users to run more than 30,000 PalmOS apps on the device. Also from the official announcement:

“Palm also announced that MotionApps (www.motionapps.com) is creating an emulator application that will allow most Palm OS applications to run on webOS devices. The application, called ‘Classic,’ will be available for purchase when the Palm Pre phone becomes available from Sprint in the first half of 2009, and gives users peace of mind as they transition to Palm’s new webOS.

Since Palm OS applications running in Classic won’t be able to leverage core webOS functionality, Palm is working with partners to ensure that popular Palm OS applications are made available on the webOS platform and are optimized to take advantage of everything it has to offer. In the meantime, the MotionApps Classic application will allow customers who have invested in the Palm OS platform to use Palm OS applications they’ve grown to love and depend upon on their new webOS devices.”

Mildly interesting announcements, I suppose. Still, frustrating for those waiting for news that really should have been provided by now. What of pricing and availability information for the Pre? When will we be given that?

Fascinating.

• Three new pricing tiers in April: $.99, $.69 and $1.29
• iTunes Plus eight million songs DRM-free today. By the end of this quarter, all songs will be DRM-free in iTunes Plus
• Finally, the iTunes store will be available to iPhone and iPod touch users via Wi-Fi AND 3G networks beginning today.

This is a big step for Apple (AAPL), says Phil Schiller, and a big step for music. And with that, he welcomes Tony Bennett to the stage to close out Apple’s final Macworld. Bennett’s first song: “The Best is Yet to Come,” followed quickly by a second, “I Left My Heart in San Francisco.”

After a few parting words from Schiller, the keynote address ends. No jaw-dropper announcements, no cameo appearance from Jobs, but a good keynote just the same. Schiller did his boss proud, I think.

And that’s exactly what consumers are looking for, according to Google (GOOG).

“We’ve seen quite an increase in queries for things like discounts and bargains and things like that,” Google CEO Eric Schmidt told “Meet The Press” this past weekend. “And we know that shoppers are using the Internet to get better pricing.”

In an announcement reaffirming the device’s pricing (from $199 for 8GB to $299 for 16GB to eligible customers), AT&T said it will sell the iPhone 3G without a contract for $599 (8GB) or $699 (16GB). When? “In the future.”

AT&T will begin peddling the iPhone 3G at its retail stores beginning July 11 at 8 a.m. local time, along with bundled voice and unlimited data plans ranging from $69.99 to $129.99 a month. The company’s posted a handy 3G coverage viewer here. If you’re not quite sure how to find an AT&T store, wait in line, and make a consumer electronics purchase, AT&T has a helpful list of “How to Get iReady” tips for you and some instructional videos as well …

At least that’s what China’s State Intellectual Property Office is claiming, anyway. This morning SIPO denied reports that it’s investigating Microsoft’s (MSFT) market position in the country. “The [State Intellectual Property] Office believes these reports are not real,” SIPO said in a statement. “The Office is authorized by the relevant government agencies to investigate and research domestic piracy issues. … The Office has never undertaken any market monopoly investigation, and has no plan to do so.”

A vehement denial. But one perhaps worth questioning, considering that a SIPO official confirmed the investigation to Agence France-Presse this morning: “Our departments are carrying out the investigation,” the official said. “We will release the findings later.”

In recent days the commission has subpoenaed Intel, AMD and a number of their PC-maker customers as part of a probe into Intel’s pricing policies, which some claim are engineered to maintain a near-monopoly on the chip market. Intel, which has long claimed that its business practices are well within U.S. law, did so again today in a statement announcing its cooperation with the FTC investigation. “The evidence that this industry is fiercely competitive and working is compelling,” it said. “For example, prices for microprocessors declined by 42.4% from 2000 to the end of 2007. When competitors perform and execute, the market rewards them. When they falter and under-perform, the market responds accordingly.”

But what if a competitor, say AMD, falters and underperforms because a rival is threatening its customers? What if it falters because a rival is using illegal inducements to dissuade PC-makers from buying AMD processors and “knee-capping” those who do? Which is what AMD accused Intel of in its 2005 antitrust lawsuit. In 2000, for example, Michael Capellas, then chief executive of Compaq Computer, allegedly told AMD that Intel had withheld the delivery of some microprocessors he needed for servers because of Compaq’s relationship with AMD. He told AMD he would stop buying from it, saying he “had a gun to his head.” And in 2004, Gateway officials are alleged to have told AMD that Intel “beat them into guacamole” in retaliation for their limited dealings with its rival. And these are but two incidents in a list that includes similar alleged acts of coercion by Intel involving 38 other computer makers, distributors and retailers.

Cupertino is reportedly in talks with some of the major music labels about adding over-the-air downloads and a greater variety of ringtones and ringbacks to iTunes in advance of the debut of the 3G iPhone. But getting the labels to agree to such a thing may come at a price, or rather a variable-pricing model.

The labels have long wanted iTunes to abandon its policy of selling songs at a flat rate of 99 cents in favor of a variable-pricing system that allows them to charge more for popular tracks. In the past, they haven’t had the leverage they needed to force Apple to do this. But with the mobile music market at stake and the company gunning for a big 3G iPhone launch come June, Apple may have no choice but to agree to the labels’ terms.

“[Mobile is] clearly an opportunity Apple is missing,” IDC analyst Lewis Ward told Wired News. “And Apple is going to want to do it all themselves, but these OTA music storefronts have not sold very well. Maybe there’s secret sauce Apple’s thinking about, but the track record [of mobile music and ringtone stores that require a credit card rather than charging users via their cellphone bills] has not been impressive to date. The real issue is billing. People are much more comfortable with paying through a carrier [because] you don’t have to enter a credit card number or be worried about security. … That puts the carrier in the supply, and the carrier is going to want their cut, which means the margin for Apple goes lower.”

This morning, Apple’s U.S. iTunes Store began offering six HBO series: “The Wire,” “Flight of the Conchords,” “Sex and the City,” “The Sopranos,” “Rome” and “Deadwood.” The first three are priced at iTunes’ standard rate of $1.99 per episode. The second three are $2.99 each, marking the first time Apple has allowed variable pricing for TV shows in the U.S.

Quite a coup for HBO (TWX), especially given some of the other concessions it was able to win from Apple: HBO programs won’t be offered for purchase on iTunes until they hit the DVD window, and new episodes of series won’t be available until months after their TV premiere.