Why iPod Can't Save Apple

MadMirko writes "MacNN quotes an article from Money Magazine titled Why iPod can't save Apple, which says 'the buzz on the digital music player and "swank" storefronts are masking an ebbing bottom line, noting reduced CPU sales (resulting a shrinking marketshare), decreased profits (in part due to the lower-margin iPod and little-to-no profit at the iTunes Music Store), failure of the iPod to drive CPU sales, failure of the retail stores to increase marketshare, hidden retail store costs, no operational income, and little value in the stock.'"

Comments

Yes, yes, yes, Apple's dying, blah blah blah

[The I Shing]

Yes, yes, yes, Apple's about to bite to dust, we've been hearing that for years.

Check out the Apple Death Knell Counter for links to many, many other articles, dating back to 1995, all of which have experts predicting that Apple is about to go bust.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[tdemark]

Yeah, but this article is different... I don't think they used the term beleagered once.

- Tony

Re:Yes, yes, yes, Apple's dying, blah blah blah

[SillyNickName4me]

low margin != low price. What this is suggesting is that the ipod is rather expensive for apple to make.. soemthing I somehow don't really believe, which makes me doubt the entire article.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[Orkin]

All you have done is denied the premise of The I Shing's statement; you have in no way refuted it. Semantic arguments are just plain silly...

When someone refers to the immediacy of something by saying "Apple is about to die," they are OBVIOUSLY referring to a commonly accepted understanding of the relative immediacy of the impending collapse. To compare this to the collapse of England or the Sun going nova is just avoiding logical discussion of the topic altogether.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[smittyoneeach]

Disagree. Apple is to computers what Cadillac is to cars.
I want to see an economically-founded argument that targeting the premium segment of a market is a Bad Thing.
Had I cash aplenty, I'd be all about one o' them sexy G4 monstuhs with a flat screen the size of a sheet of plywood.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[theLOUDroom]

And one year they'll be right. It's a definite that one day apple will die. Just as IBM will die, Intel will die, AMD will die, America will die, England will die. Over an infinite amount of time all these things will one day end. It's a definite and provable truth. So yes Apple is constantly about to die, but the question is on who's timeline are you talking?

I dunno about that. Some groups (IBM, The Rolling Stones, etc)have so much money and power they'll probably be around forever. Even if the universe was going to end, IBM's R&D would probably to develop a method to transport itself to an alternate dimension.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[Nakito]

Indeed, the article cites the "failure of the iPod to drive CPU sales" as evidence of trouble. Have the authors of the article forgotten that Apple made a deliberate decision to make the iPod not dependent on the Apple platform? The ads tout that the iPod is compatible with both the Apple and Windows platforms. So here is a product that is successful in exactly the way that Apple intended: it is penetrating the market for Windows users as well as Apple users. Would the authors of the article be happier if the iPod was instead limited to the Apple niche?

Re:Yes, yes, yes, Apple's dying, blah blah blah

[Jonboy X]

Over an infinite amount of time all these things will one day end. It's a definite and provable truth.

Reminds me of an old joke from a friend's sig line: "I plan on living forever. So far, so good."

Re:Yes, yes, yes, Apple's dying, blah blah blah

[TheRaven64]

I prefer the line from Blake's 7:

`I plan to live forever. Or die trying.'

Re:Yes, yes, yes, Apple's dying, blah blah blah

[duffbeer703]

The key word is "lower" margin. (ie 40% margins are great, 20% are good)

Apple makes obscene profit margins on the rest of its hardware, while making traditional consumer-electronics margins on the iPod.

Remember also that Apple has all sorts of overhead. They need to keep OSX current, they develop their own software and must spend R&D money to improve their hardware... all to sell a few computers.

Contrast this to Dell. They do no R&D... they assemble.

Sun lived on Apple's business model for years, and look where it brought them. When was the last time you bought a Sun Workstation?

Re:Yes, yes, yes, Apple's dying, blah blah blah

[ObiWanKenblowme]

Loosing market share and shrinking margins is usually a pretty sure sign a company is in decline.

Losing market share is actually not a pretty sure sign a company is in decline. Market share is only a ratio of the number of your products sold to the total products sold in a market. You can sell 10 widgets one year and 100 the next and still lose market share if UltraCompuMegaCorp's widget sales go from 20 to 2000 in the same amount of time.

Whether a company makes a profit, however, is a pretty good indicator, and it's something Apple has been able to do for the last several years. I'll believe Apple is dying when I see a big "going out of business sale" graphic on apple.com.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[LaCosaNostradamus]

Roger that. Only in America can we judge that a company selling a profitable product is a non-viable entity. This only means that we are used to Wall Street declaring a company dead if they made 6% this year instead of the 9% that their analysts predicted.

I'm sure that Steve Jobs wallpapers his office with all of the predictions of Apple's demise. If we keep going like that, we'll give him enough to wallpaper all of Apple's offices.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[cptgrudge]

I think it's a quote from the American actor and comedian Steven Wright.

Some of his better known quotes are here.

My favorite has to be, "Ever notice how it's a penny for your thoughts, yet you put in your two-cents? Someone is making a penny on the deal!"

Re:Yes, yes, yes, Apple's dying, blah blah blah

[ztirffritz]

Just so you know, OS X, and OS 8 and 9 for that matter, support 2 and 3 button mouses (mice? Meese?). I agree that sticking to a 1 button mouse for the sake of tradition is stupid though. Having 2 buttons makes life so much easier. I just bought a cheap 3 button mouse and now use the old one as a paperweight. It looks cool. Better yet though, use the terminal window and unplug the mouse.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[geoffspear]

If Macs ran on something other than electricity from the socket on my wall, your first analogy would be apt.

If I buy a Porsche, I'm not going to whine that the addons cost more than they do for a Taurus.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[Bander]

now if I could just get past the one button mouse thing

Yeah, I think the the fact that the default mouse has one button is lame, but people who prefer more buttons can certainly use them in OS-X. I plug a Logitech USB mouse with scroll wheel into my PowerBook, all three buttons work fine, and the scroll wheel works in every app.

If you're a Unix geek and you can afford one, or your work can afford one, the new PBs are the best notebooks around. The G5 towers are pretty swanky too.

-- Bander

Re:Yes, yes, yes, Apple's dying, blah blah blah

[fyonn]

assuming you don't know. mac's only come with a one button mouse doesn't stop you using a multi-button mouse with it. I use a 5 button m$ intellimouse explorer with wheel and you know what, I'm actively using all the buttons.

without any extra software install, left, right and wheel do exactly what you think they would. wheel click is paste in some apps (like terminal and prolly X11) and buttons 4 and 5 can be used for expose.

with something like usb overdrive instyalled then you can map any button to a variety of functions so I have middle click as paste in all apps, button 4 as copy and button 5 as expose - all windows.

makes for a nice mousing environment

dave

Re:Yes, yes, yes, Apple's dying, blah blah blah

[Krondor]

Contrast this to Dell. They do no R&D... they assemble.

This is a great point, but it's not longer true. It was true several years ago, however. Dell now does a good deal of in house R&D. They used to buy laptops from Sager and rebadge them as Dell. Now their laptops are designed in house and a good deal of engineering goes into them. Take this for example.

With the Dell Axim, their Ipod clone, their line of custom cases, laptops, and even proposed standards (dell is pushing for a standard port for upgradeable graphics cards in laptops, and is developing a solution in house for it). They are way past their assembler days of yore.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[southpolesammy]

Keith Richards doesn't even need money. His brain has been dead for years but the drugs are keeping his corpse animated enough to fool most people...

Re:Yes, yes, yes, Apple's dying, blah blah blah

[duffbeer703]

Ooooohhh... give the troll a cookie.

Try reading Sun's annual report sometime. You might come to the realization that your company is in the minority by far.

Sun's cash cow back in the day was the $10,000 pizza-box workstations that they sold to universities and companies. The market has completely vaporized expect in the minds of /. trolls.

Hell -- even SUN abandoned that market. Most Sun people are using Sun Ray terminals last I heard.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[TitusC3v5]

Apple - Unsuccessfully going out of business since 1995.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[dasmegabyte]

The main reason Apple is constantly reported as "dying" is that same reason that so many of us are captivated by the company:

We have no idea what they're up to.

An ordinary tech company, as soon as something goes wrong, they start firing people and puffing out their chest about strategic alliances and new products that might come out some day, maybe.

Apple, on the other hand, doesn't tell us what they're up to until they're pretty much done with it. And then when they tell us, they do so in a way that impresses the shit out of us. We don't see the broken-ass beta version for six months before the final...we only see the final (which may have some bugs, or issues, but is definitely usable). Their R&D department is one of the most locked down in any industry. They don't issue press releases or hints the second they come up with an idea. Instead, they embark on internal analysis and testing.

The economic pundits of the world look at Apple and see their tight lipped R&D as "no ideas on the horizon." Which is ludicrous. Do these people think that iTMS, the iPod, the G4, OSX, just materialized out of thin air at MacWorld? Every time somebody's predicted Apple's imminant failure "unless they do something," they did something. Anybody who still makes predictions on a company that's proven so versatile and resourceful is a goddamn moron. Apple's successes were not ACCIDENTS.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[marklar1]

They do run on something other than gasoline...it's called a "UNIX", and is getting more interoperable with LINUX suff "X11" and FINK all the time.

One might argue, and certainly gnome and kde fans will disagree, that they have the best solution out there with a full powered command line, full line of consumer oriented (an polished) multimedia interfaces (Garage Band, iPhoto, iMovie, iDVD) etc. etc.

Then look at the climate of MS haters...governments and cities looking for alternatives...it won't always be open source, as that too has it's limitations, and costs, for we all know open source isn't "Free $$".

Apple had some failures to modernize, and between Copland, Be, etc... I truly had doubts that they'd get their shit together, but time and again they've suprised me...past performance is no indicator of future success, for Apple, or Microsoft. That being said, in the end, I think the software (OS and apps) direction they took was fantastic, and the consumer end of things they're getting into shows tremendous success.

Apple doesn't need to be Microsoft. They are not successful if they have a certain market %, any more than you are I are only successful if we turn into a famous programmer, astronomer, athlete, etc...they are successful in their own right as long as they are a profitable self-sustaining company....which if you look at the financials, they absolutely are.

Who can guess how they will expand in the future? The next Sony, a Sony partner, or, if the shit hits the fan, and they can no longer be a "hardware" company, they may always have another go with software and just release the OS for sale on X86....but that's another story for another day.

Gotta get some work done.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[mjj12]

Only 1995? I read my first "Apple is dying, blah blah blah story in 1981, which was three years before the mac. It was the classic "Apple 2 sales will shrink because of IBM's greater market share and greater resources, and Apple's limited ability to produce another computer that would be competitive in the market". I have been hearing this ever since, and it has always sounded *exactly the same*. Apple is in a stronger position right now than it has been for quite a while, and its brand is suddenly valuable again. We will see what it does with this, but like everyone else I will just yawn when I see a headline like this.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[MoneyT]

Look into a little piece of software called SideTrack and all your worries of only one button will be washed away.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[Feral Bueller]

Maybe if IBM became a religion they could live forever.

Then Apple has nothing to worry about.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[jo_ham]

Expensive upgrade path?

That one died a long time ago - the RAM, HD, optical drive, graphics card, peripherals, plugs, cables, ethernet ports, and so on are all pretty standard.

The only difference between a tower Mac (G4 or G5) and a PC when it boils down to it is the motherboard and the CPU, but how is this different to buying a PC board that supports a P4 or an AMD chip - you usually have to replace the board if you want to up the speed of the CPU unless you stick with a compatible form factor.

The eMac and iMac aren't easily upgradable, but they're not designed to be.

The iBook and Powerbook are both fairly easy to upgrade in terms of new hard drive and optical drive - both parts are standard laptop components used in PC laptops.

It may cost more to get into the Mac platform (I agree, all new software is expensive) but once you're on it doesn't cost a huge amount more to keep up to date with the hardware compared to updating a PC. The long working life of Macs also helps here - from the entirely unscientific anecdotes of mine, I've dealt with a fair number of Macs and PCs and the Macs tend to have at least twice the useful life before needing a hardware upgrade.

When the PC needs upgrading, I can just sling FreeBSD on it and use it as a server, but it means a new machine is needed. The Macs I have just keep going - running OS X here on a battered old G3 which is ambling along nicely.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[soft_guy]

I'll make you a deal. Since all that's stopping you is the mouse, you buy a G5 and send me a copy of the receipt and I will personally buy you a two button mouse.

Re:Yes, yes, yes, Apple's dying, blah blah blah

[oconnorcjo]

Loss of market share sucks. Big time. That is exactly why it is so often cited as such an important metric.

Rolls Royce probably has a small market share but nice profit margins. Profit Margins can be much more important than market share. And personally, I would rather be in a niche market with high margins than a big business with low margins. Lots of businesses with low margins go out "of business" but "large margin" products are a god send... the problem is that when others notice the large margin you are making, they want a piece of the action.

Better link to article!

[amitti]

Here, you won't have to sell your sole to read it:
http://money.cnn.com/2004/03/17/markets/freei ntro_ ipod_0404/

-Aaron Mitti

Re:Better link to article!

[BiggsTheCat]

What about my halibut?

Re:Better link to article!

[turgid]

Here, you won't have to sell your sole to read it:

Good. We wouldn't want impared perambulatory function or to have to miss dinner.

Re:Better link to article!

[TexTex]

Link that works out of the box, and properly formated...here...

http://money.cnn.com/2004/03/17/markets/freeintro_ ipod_0404/

Re:Better link to article!

[Hiro Antagonist]

Quit floundering around and just read the article.

Re:Better link to article!

[Black Perl]

Why so crabby?

Re:Better link to article!

[niko9]

He's usually very mellow; must be a fluke. :o)

Apple is dying...again.

[BWJones]

Yet at the same time, Google has reported an increase in the percentage of Mac users using Google. HP has licensed the iPod for distribution and iTunes for inclusion on HP computers. And furthermore, Apple appears to be making huge headway into the science and technology markets as well as gaining steam again in the higher education environments. Finally, a significant portion of the scientists I work with are switching platforms from Windows to OS X.

So, from where I am viewing the market from the perspective of an end user, Apple's market position is looking pretty good to me. This article appears to be another one in the long chain of prognosticators predicting the demise of Apple Computer, but what they always miss is the disproportionate influence the company has had on the personal computer industry. Hey, where would Microsoft get all their R&D from if not for Apple?

Re:Apple is dying...again.

[thogard]

Apple may be dying but I know a large number of people that have recently bought new macs and I've been sending people off to buy macs because I do not answer window questions anymore. At the after meeting Pizza at the local lunix users group last month there were 10 people that had mac laptops out of the 30 or so people.

Of course I'm holding out on buying a new one till they come an Apple [tm] 3 button mouse.

Re:Apple is dying...again.

[jpflip]

I second that observation - I'm one of the only physicists on my experiment who doesn't use a Mac laptop! OS X has a lot of appeal in many parts of the science community - it allows a user the ability to transparently use a lot of unix/linux functionality (ssh, xwindows, etc) to deal with workstations and data servers and yet gives you a fun, slick user interface when you want it. Not to mention that Mac laptops, while somewhat delicate, are very nice.

Re:Apple is dying...again.

[Anonymous Coward]

If you're going to ingest hallucinogens, at least - offer us some.

Ahhhh, spoken like a true Linux user: Wanting someone to give you something for nothing eh?

Re:Apple is dying...again.

[ProfKyne]

Yet at the same time, Google has reported an increase in the percentage of Mac users using Google.

That would make sense, since the default web browser on MacOSX puts a Google-specific search textfield on every window.

Re:Apple is dying...again.

[TheRaven64]

Of course I'm holding out on buying a new one till they come an Apple [tm] 3 button mouse.

Then you are going to be waiting a long time. MacOS, and Mac applications are designed not to need more than the single button. I bought a three button mouse for my PowerBook, and the only time I ever use that is when I'm running X11 applications. Nothing native needs it (which is not to say they don't support it. They do.)

Apple...

[Azadre]

Going out of business for over 28 years

Re:Apple...

[Anonymous Coward]

Man...they need a shirt of that at ThinkGeek!

I love that!!!

Re:Apple...

[Timothy Dang]

Hey, we'd all know if they were really going out of business when they have a sale. Just think, iPod mini's for their actual value.

Sheesh. "The Sky Is Falling"

[grub]

How many tech companies (which were media darlings) imploded during the Dot-Bomb? Apple wasn't among them and they've been "Dying Since 1976". Hell, even one of the latest tech poster-children ( Segway) is sucking rocks. Apple has a core (no pun intended) market and a loyal customer base.

These analysts have an intangible they can't convert to numbers on the spreadsheet: customer loyalty. No user I've ever met has the same passion for Dell, Compaq or Microsoft.

disclaimer: I'm an Apple fanboy; bought a ][+ in 1981 (which still works!) and a variety of Macs along the way.

OSX

[mod_critical]

I still think OS X is going to save Apple. It may be a slower propegation than this narrow analysis on the iPod and iTunes, but from what I have seen it has been creating more and more demand for Apple products.

Just locally, I have been spreading a "Mac Fever" to many of my collegues. A friend of mine turned me Mac this past summer after leaving an iMac with Panther on it up in our office all summer. He was working out of town for several weeks, and I used it regularily. I would have never wanted a Mac running OS 9, but now that I've used Panther...

After he got back I had to return to my Winblowz box (as I cannot use StuidoMX or Photoshop on Linux =[ ). After that I was fevering for a Mac hardcore. I finally was able to pick up a new G5 around Christmas time.

Ever since, I have been estatic about its performance, beauty, and stability. This has lead to antoher PowerMAC for the office, and two iBooks between my friend and I. The other people we work with are seeing how well our Macs help us get our work done, and are now looking to buy Macs of their own.

At other places I have worked I see the same thing happening. Someone gets a Mac, and six months later four or five other people have gotten not just one, but usually two, for office and home.

Of course, a computer is more expensive than an iPod, so this growth will be slower, but I see it occuring in force all around me.

Re:OSX

[oscast]

"I still think OS X is going to save Apple."

As if Apple needed "saving"

The company could use a healthy dose of growth but they are certinly not it need of "saving".

Re:OSX

[spamtrap]

Yep. Same here. My wife is the Tech for a Geology Dept. at Ohio U. Whe she started there was her and one other Mac person. Now half the department has G5 Macs.

She spends 98% of her tech support time with the windoze folks.

Every time another virus runs amok, she adds another Mac person.. Last time, she got all of the professors in one room and had the ones with the virus raise their hands. Then all of the Mac people raise theirs.. Her Quote. "You are smart people. There is a lesson to be learned here."

For me, the only only time I boot windows is in VirtPC to play poker. Otherwise, I don't even give it a thought

Like she says.. Mac OS X has none of the stability and security that you associate with Windows...

Re:OSX

[ozric99]

She spends 98% of her tech support time with the windoze folks.
Every time another virus runs amok, she adds another Mac person..

Without meaning to sound patronising, perhaps she should do some work to secure the windows boxes instead of letting viruses "run amok". I work in a 100% Microsoft shop (well, ok, we have Solaris boxes, IBM mainframes and a few linux machines dotted around) and in all the years I've been here we haven't been hit by one single virus. Our network is plenty secure, thanks, and while I'd rather we didn't use so many Microsoft products, viruses/worms come last on the list of my reasons to change.

Frankly I'm getting sick and tired of paper MCSEs who know about as much about properly securing a network as I know about how financial markets work.

Rant over. :) That wasn't particularly directed at your wife - your story was merely the catalyst.

Re:OSX

[Codifex Maximus]

>> The lesson to be used there is that a Mac
>> is a better computer for people who don't
>> know shit about computers because it gives
>> you less chances to shoot yourself in the
>> foot.

Word. Most people don't know shit about computers.

>> OTOH the worms running around now primarily
>> infect computers through user error.

If you call buying a WinXP machine prior to SP1 and MS RPC Patch publication OR not knowing enought to check if the patches are installed, then yes it is user error. (see my reply above)

>> Once again, MacOS is only invulnerable
>> because there's not enough of it out there
>> to make it worth writing this kind of
>> software for.

I have to agree, mostly, with this statement. However, I'd have to add that BSD isn't intrinsically vulnerable and doesn't rely on Security by Obscurity.

>> But, since it depends on a user downloading,
>> extracting, and running something,
>>

The Worms don't require the user to download ANYTHING! They attack the computer via the RPC mechanism. i.e. Connect to the net without the SP1 and RPC Patch installed and WHAMMO - worm infestation.

>> if you swapped Windows' and MacOSX's market
>> shares tomorrow, the same sorts of software
>> would appear on the Mac tomorrow.

Probably - if you equate "same sorts of software" with viruses and worms. But, it would probably take longer than tomorrow. Windows is like Swiss Cheese; BSD might have a hole or two - YOMV.

iPod tried to save Apple...

[bcolflesh]

But in the midst of the rescue attempt, the battery died and couldn't be replaced!

Welcome to last year...

[kakos]

And the year before that...

And the year before that year...

And the year before that year...

Welcome to every point in the past 10 years except NOW.

Earnings

[BWJones]

Interesting because others have estimated that the iPod will add another 15 cents a share to Apple's earning this year which rises to 25 cents a share by 2006.

This is only focusing on the iPod and ignoring all other products in Apple's inventory announced and unannounced which are having large influences in their respective markets.

Facts

[Lizard_King]

"Out of the hundreds of people who were waiting outside Apple's SoHo store in the cold to buy an iPod, I could find only one whose positive experience with the music player led him to buy an Apple computer."

This is a strange statement. If the hundreds of people were waiting to buy an iPod, how would they have already had the iPod experience that would push them to purchase an Apple computer? Chicken before the egg here? As with most of the 'Apple is dying' articles we've seen over the last 15 years, this one mixes numbers without context and some strange subjective observations.

Oh yeah, BSD is dying too. And Bluetooth... =)

part of the comments are probably true

[Anonymous Coward]

CPU sales: the G5 may be popular, that is popular for a high end machine, but the more affordable machines, the iMac and the eMac, are in need of a serious upgrade (why not a G5) to make them attractive again - these machines don't sell that well anymore (I don't have inside information, but this could be learned from various reports).

Tom, happy owner of a 2x1Ghz PowerMac

Re:part of the comments are probably true

[John Harrison]

They don't need an upgrade as much as they need a price cut. Yes, I know it won't happen.

People buying low-end computers who are not computer-savvy would love to get the pretty Mac that they see at CompUSA, but they see an eMachines box for 1/3rd the price and don't understand why the Mac might be worth it. The masses don't understand the benefits of a G5, OS X, or any of that. They are looking at price tags.

I would be interested in knowing what Apple's share of the low-end laptop market is. The iBook is actually very price-competitive. If they didn't purposely hobble it I would buy one.

iTunes may save them...

[MalaclypseTheYounger]

As a user of iTunes (mainly because I drink way too much soda during the day, and redeem free songs from Pepsi on iTunes) I have grown to really like their service. If it continues to grow (by adding on to their somewhat meager existing library) they will definitely have a new source of income online selling music. From me, anyhow.

And I may just have to go buy an iPod now to hook up to my iTunes service.

Kudos, Apple... you have got a hard-core Mac hater to use your products. I would call that an amazing success.

Another "Beleaguered Company" Story

[chia_monkey]

Some of these authors need to get with the times. Just because it was trendy to talk about the "beleaguered company" back in the 90s doesn't mean all those arguements still hold water.

iPod won't save Apple? Controlling most of the mp3 player market isn't good? And this helping iTunes Music Service start up...the FIRST one that all the major labels thought was worth trying and has 50 million downloads? I'd say the iPod did a good job (especially with it's high profit margin).

Oh yeah...I guess the deal with HP doesn't amount to anything either. I'm sure all the top brass at HP was thinking "hm...how can we get more money? Hey, let's go with a product that nobody knows and that won't bring in any money...not for the company that invented it and certainly not for us".

C'mon people...get with the times. The iPod is just one thing. And a damn good thing. It's bringing a lot of money and recognition to Apple. Now add a supercomputer built from G5s at VA Tech, major enterprise software apps being ported over to Mac...um...hello...

Oh, come on

[Zog The Undeniable]

Apple has one of the strongest brands in the world. They have fiercely loyal customers (no, I'm not one of them). They have a reasonable licensing policy for their OS (try and get a family multi-computer discount for XP Home Edition, ha ha). Anything they make with an "i" in the name gets snapped up by said loyal customers. If obscure Taiwanese component manufacturers with virtually no brand image can make money, Apple should be coining it in. Jobs just needs another big idea like the iMac and the iPod and everyone will forget about Apple's demise for a few years.

What they're basically saying is...

[phillymjs]

...Apple is nothing without the iPod, and the cash iPod sales bring in.

To which I say, where's the companion article about Microsoft's dire financial situation? I mean, if they didn't have Windows and Office income subsidizing all their money-losing products (which is almost everything else they make), they'd be hemmorhaging money in a way that would shame the Pentagon.

By the way, Apple's computer sales are down because the models are stale and a refresh is due (or overdue, in the case of the G5). I've got several thousand dollars sitting in the bank, just waiting for the new G5s to be announced, and I am far from alone. And the iMac and eMac lines were very recently EOL'd and should get updated soon as well.

~Philly

With 4 billion in cash and no debt ??

[nazzdeq]

Apple has 4 billion in cash and zero debt. As the Money magazine article stated, Apple makes more money from the interest on their pile of cash than they do in profit. But, they make 60 some million on both. That's 120 million a year in profit and no debt. The guy who wrote this article has an axe to grind and that's all. I would love to be in Apple's position.

Little value in stock?

[JBMcB]

Let's see, there's all Apple's IP, QuickTime technologies in MPEG4, a ton of software (OSX, Logic, Final Cut, Shake, i-Software) a fantastic industrial design department, manufacturing facilities, tight ties to Pixar (one of the most successful movie studios) a mature and integrated hardware/software design team, a chain of retail stores (successful or not, it's capital investment) and, currently, the most popular online music store (though not making profit, it's bringing in eyeballs) as well as the brand name Apple, probably as well known as Microsoft.

I'd say there's quite a bit of value in APPL.

Re:Little value in stock?

[zhenlin]

APPL!?

What does Appell Petroleum Corporation (APPL.PK) have to do with Apple Computer?

You must mean AAPL.

Well...they do have a point....

[Anonymous Coward]

OS X is based on BSD....

Apple seems to be coming back

[emacnabber]

I go to a major university and have always had the habit of seeing what types of laptops people use as I walk around. In the last 6 months I've noticed a huge increase in the number of Mac users. Yesterday while walking to class, I saw that about 2/3 of the students had Macs. When I started at the university three years ago I really don't remember seeing anyone who had a Mac. From my personal experience, Macs seem to be increasing in popularity.

Re:Apple seems to be coming back

[YellowBook]

I go to a major university and have always had the habit of seeing what types of laptops people use as I walk around. In the last 6 months I've noticed a huge increase in the number of Mac users.

That's probably because Apple laptops are price-competitve with Wintel. Wintel desktops are cheaper than Apple because of economies of scale which don't really apply in laptops -- all laptops are basically proprietary designs. So if you buy a Powerbook or iBook, you get a quality laptop at about the same price as a Wintel laptop, plus desirable features like OSX and much longer battery life. Not surprising, then, that Apple laptops are popular even while the desktops are kind of a niche market.

Blame Games

[obsid1an]

Games are what are driving most new PC sales. Most games don't run on macs. Even if they do, the needed hardware is just too damn expensive. Apples are nice computers but they are in a niche market, and that market doesn't really have a need to buy a faster computer every year or two.

I do love Macs...

[Beardydog]

I just can't afford a real one. I was raised on them, up until G3s, at which point we stopped buying from Apple, and I started molesting my poor 9600 with third party upgrade cards. Unfortunately, you can only push old hardware so far before it's overwhelming oldness clamps down on any boosts you might be striving for. It's going to be a long, long time before I can afford a new Apple computer, so here I am with a 2.4 Ghz PC I got for 300, playing the living hell out of games that aren't available for the Mac, Photoshopping, Dreamweaving, etc... My poor FrankenMac is living with my mom now, until she can afford a bargain PC of her own to run her home business on. It's too weak/old to run X properly, so she's using 9.1. It's a sad thing to be a huge fan, but be outside their intended user base because I don't have 3,000 to blow on something decent. Reminds me of a G5 parody site: Ask yourself, "Is my money good enough for this computer?"

Does Apple really need to be saved?

[imperator_mundi]

Apple is posting profits => Apple doesn't need to be saved.

Market share does matter only if you're from Redmond and/or your plotting to rule the world, "normal" corporation are just after money, and money is just what Apple is making.

Could the Walkman have Saved Sony?

[H8X55]

Yeah - i think this is much ado about nothing. I wouldn't write Apple off at the moment. Using stats w/ declining computer sales is a little suspect. Couldn't we say the same about Dell, HP/Compaq, Gateway, and IBM? The iPod, if nothing else is advertisement for Apple Technology. The G5 running Panther OS seems like a very strong combination of hardware/software. And i might wager than PC owning consumers buying iPods just might consider a Mac the next time around the block.

I wonder if the iPod could actually save Apple. It's not that I think Apple needs saving, but more so, question whether or not a $300 mp3 player could revitalize a company. Did Sony need saving when they released their Walkman? Did Nintendo need the Gameboy the rescue them form extinction? Nope. These companies used these products to become even more powerful than they already were.

Re:Could the Walkman have Saved Sony?

[misterpies]

Frankly, Nintendo probably would have disappeared a few years ago without the GameBoy. And there's no doubt that Nintendo is only a fraction as powerful as it was when the GameBoy was released - back then, the NES was the top selling games system in the world.

To get back on-topic, I hope Apple isn't betting the company on the iPod, because I don't see a long-term future in standalone music players. I'm in the market for a new cellphone and find that even on the cheapest contract deals I can get a free phone with a built-in MP3/AAC player. Some even include video players. OK so most have limited flash memory for now, but it can't be long until they start integrating gigabyte drives. I'd also be willing to bet that phone companies will soon create music stores that will allow people to download tracks to their phone direct without having to go through a PC. When that happens, then unless Apple has an iPhone up its sleeve and a deal extend iTunes to become a mobile service, it can kiss its music business byebyes.

Why iPod Can't Save Apple?

[mccalli]

Why iPod Can't Save Apple? Easy - because it doesn't need saving.

Cheers,
Ian

Raises concerns, but panics a bit too

[sg3000]

I haven't read the entire article since I'm not a subscriber to Money Magazine, so it's hard to gauge the article from just those quotes. However, the quotes seem to point out some valid concerns, but it might be a bit of "chicken little" as well.

The market share numbers aren't terribly convincing (since there's about a dozen different ways to measure market share, and one can always pick one that fits what you're trying to say). Without more info, it's hard to judge. Though Apple would obviously rather hear others saying their numbers are going. I've heard that the iPod is the #1 digital music player today and Apple has something like 75% market share for online music, so there's an upward trend. It would be interesting to see Apple's own tracking of unit shipments compared to these numbers. (I'm ignoring comments from someone suing Apple are never convincing until the case is over. There's too much incentive for the plaintiff to basically try to blackmail the defending company into settling).

However, the author is suggesting that Apple's cash flow from operations is negative, while its cash flow from investments is positive. I presume Apple's cash flow from financing is 0 since they've retired their debt. That's not a good pattern for a mature company, and after 20 years, Apple sure is.

Apple has been remaking itself as of late, and one would expect that its cash flow profile would match that of a growing company. And since Apple has a lot of cash, it wouldn't have positive cash flow from financing (meaning its getting its money from VC funding or by borrowing), but positive cash flow from its own investments to finance its remake of its operations.

As an investor, I would argue that I would rather have Apple financing its changing operations from investments rather than from financing. That's because financing from investments is better for shareholders since it doesn't dilute shareholder equity the way issuing more shares or even borrowing from a bank does.

So is it okay for Apple to have negative cash flow from operations at this time? I think so. They've changed their business quite a bit since 1996, and those changes will affect operational income in the short run. For example, Apple has opened some 80 stores, and that's a tremendous operational expense since they've incurred a lot of fixed costs. I believe that their retail story makes sense, since they're the direct opposite of most computer stores. In a way, the Apple Stores are like Target to Best Buy, CompUSA, and the others' Walmart.

Since the stock market currently values Apple at nearly the price to earnings of Dell, it means that the market believes that what Apple is doing will pay off in the long term. And it probably will. I believe Mac OS X and Apple's incredible industrial design are the foundations of its future success. The iPod is positioning itself as the next Walkman, and Apple's in a great position regarding digital music. Their recent deal with HP further solidifies this. As for iPods driving Mac sales, anecdotal evidence is often misleading, but I've met a number of people who have recently bought new Macintoshes after being Windows users for years, and the iPod has helped drive that. There's always room for Apple to pull another Cube and screw things up, but Apple's track record has been respectable in the past couple of years, so people are giving them the benefit of the doubt in that place.

Re:Raises concerns, but panics a bit too

[sg3000]

> if Apple is making money on its investments and losing
> money on operations, wouldn't it make more sense to cease
> operations, wind up the business, and just make money on
> the investments? Is there some major financial concept I am
> missing here?

Tha's a good question. Companies that are growing (or changing significantly) can finance their growth in two ways: cash from financing or cash from investments.

1. Cash flow from financing is the typical way to do it. You can get money from a venture capitalist fund (in exchange for a lot of issued stock and partial loss of control). You also can get money from banks by taking on long-term debt. The way this works out is this dilutes shareholder equity indirectly since in the event the company goes out of business, the bank gets in line for assets before any of the shareholders. Although technically this should have zero impact on a company's balance sheet, it does tend to make investors pissy.

2. Cash flow from investments gets money into the company without diluting shareholder equity. That's why shareholders prefer this method, but few companies are in a position to do this.

This incoming cash flow is then invested into operations to expand the business, and thus cash flow from operations is negative. Eventually, the company wants to have positive cash flow from operations and use that to sustain the business. So, yes, the end game is for the company to have positive cash flow from operations and to a lesser extent positive cash flow from investments, and 0 cash flow from financing (unless the company is taking advantage of debt leverage, then there will be a positive cash flow from financing).

So why do they need this cash? Because one way to become cash flow positive from operations is to increase the company's operating leverage. Think of a graph of costs as a function of sales volume. The slope of the line is the variable cost, and the y-intercept are the fixed costs. Generally, for cost structures, the larger the y-intercept for the line, the smaller the slope of the line. So the idea is to get the y-intercept of the line up and the slope approaching 0.

The way to do this is to adjust the cost structure such that the variable costs are as low as possible. The way to do this is to increase the fixed costs such that at the targeted sales volume, the variable costs are significantly lower than the competition.

So in the short term, Apple is increasing their operating leverage using financing from their investments. It's a good strategy assuming that they can succeed. And as I said in my grandparent post, I don't think there's reason to doubt Apple won't.

One of the Points

[virg_mattes]

> An Ipod mini is not a $250 piece of gear, okay? And a 40 GB Ipod is *really* not a $500 piece.

This is one of the points that the article is considering. Low margin means that the sale price is not much higher than the price to market, and price to market includes a lot more than the cost of manufacturing. How much do those snazzy commercials take from the budget? How many dollars disappear to get the ITunes concept going? These sunk, hidden costs are part of the equation, and they can cut profitability on a product line faster than you can say "betamax", especially since Apple was banking on Ipods driving people to buy more Macintosh computers, and it really hasn't happened.

Virg

Let's see your Dell zealots

[Eevee]

When you can show me a public display like the Longest Line then I might agree. (Be warned, it's a video clip.)

Re:Let's see your Dell zealots

[baumanj]

Gee, I wonder how many would have turned out if the weather was nice?

OTOH, Japanese have umbrellas built into their quadriceps like robocop

Counterpoint

[seven5]

http://www.macobserver.com/columns/thebackpage/200 4/20040318.shtml

...
Of course, what he doesn't say is that this is because Apple has been investing in R&D. I don't want to get too far off the point, but it seems most Wall Street analysts and mainstream pundits and journalists don't get that the iPod rocks because Apple spent a boatload of money developing it. It wasn't produced by gnomes working in a magical Gnome Cave; it was produced by people, very talented people who cost money.
...

Apple has to make a decision

[DesScorp]

"Apple has a core (no pun intended) market and a loyal customer base."

Well, yes and no.

There are a lot of longtime Apple customers, but as much as we nix people like OSX for its BSD base, OSX alientated a LOT of longtime Mac users that wanted nothing to do with Unix or command lines. A prime complaint was that the Mac interface was changed too radically, and that it looks nothing like the beloved old 9X-and-lower line. I've also heard some of these people complain that OSX is too slow, especially on G3 hardware. Personally, I know more Linux people that love OSX than longtime Mac people that love it.

And now Apple has a quandry. Rather than trying for mass-market appeal but making prices competitive with PC products, Apple has tried to maintain the "join-our-exclusive-club" approach, which requires a premium in price for customers. Yes, I know you guys are going "but Macs are so much better, and you get what you pay for, and Macs are a bargain even at these prices". Well, Joe Schmo customer doesn't agree. He's out at BestBuy or CompUSA looking for a new computer, and all he sees is that Macs 1- cost a lot more, and 2- can't run the games and software that PCs can. Plus, if Joe Schmo's expierience is anything like mine, when he tries out these newer Macs at the store, he's not going to be real impressed with the quality and feel of the Apple hardware (sorry, I think the keyboards and mice have a cheap feel to them now. They generally seem more shoddy than past Macs to me). He's going to be saying "So why should I pay 900 bucks for an Emac that's slow (with it's stock 128 or 256 mb of ram) when I can get this HP for 600, or this Emachines for 400?".

Apple has to decide if it's going to stay the exclusive-club route, or try to get more converts. If they do the latter, they're going to have to price Macs more competitivly. The club route doesn't seem to be working as well. Those old Mac fans I know? Some of them are trying their best to extend the life of their beloved old Macs through upgrades, and they're using 9X for as long as they can get away with it. So Apple either has to get them back, or hope that lots more Linux users convert.

And for Segway sucking, well come on, did anyone REALLY think people were going to adopt them en-mass? The Segway was always a niche market at best.

Re:Apple has to make a decision

[rlthomps-1]

Well, Joe Schmo customer doesn't agree. He's out at BestBuy or CompUSA looking for a new computer, and all he sees is that Macs 1- cost a lot more, and 2- can't run the games and software that PCs can.

So what are they going to do? Ship windows on the machine? Even if they cut prices to be "competitive" Joe Customer is still going opt for the PC because he can run his games and software on it. So in your senario Joe Customer would still buy the PC because it still has an advantage over his Mac unless the Mac was priced much lower than the PC to make up for its "crippled" status. Or maybe there's other reasons why folks buy Macs other than price and software availability.

See everyone's a freakin' expert on this, you don't think that Apple has a strategic financial think tank? You don't think that they're plotting the course best for them? Why is it that Apple critics think that becomming Dell is ONLY viable option for Apple?

I think Apple likes where they are. They're not the dominant strip n' ship shop, but they're cutting a profit and they're making innovative designs. Guess what? They're happy with that! Not every company needs to aspire to be Microsoft or Dell.

My story, I guess.

[imag0]

I remember the 0.97-pre-1 days quite well when Linux stunk on ice, boys and girls. I've use Linux and UN*X for quite some time, helped write training manuals during the dot-bomb days and have enjoyed the Linux and UN*X communities thoroughly.

This year when it was time to upgrade to another computer, did I get a bitchin' dual processor rig with gobs of ram, all bone crushing speed and input jacks galore?

No. I got a (nice, used) Quicksilver 867 with a Superdrive and an iBook to take with me on vacation. I can develop software, scripts and all sorts of goodies in the shell or just jump and start up a nice game of Q3A, or UT2004, or whatever. These pieces of hardware to the job that couldn't be done by others for ideological, historical, or monetary reasons and I'm glad that someone put unix on the desktop in a fashion that is easy to use and has plenty of future still in it.

Unix has made it to the desktop, ladies and gentlemen. Thanks for an excellent job, Apple.

I'll be back to buy more sooner than later.

I don't see it

[TheSwirlingMaelstrom]

I attend both astronomy and computing conferences regularly. In the last year or two (since Mac OS X and the new line of PowerBooks really started catching on) I have seen a dramatic change in the laptops being used at these conferences. A couple years ago, there would have been a handful of Dells, a few IBMs, some Sonys, and maybe, just maybe, an Apple or two out of fifty laptops. This has changed to point where 30%-40% of all laptops I see at these conferences are now Apple PowerBooks or iBooks running OS X.

I've never been a huge fan of Apple, but have always grudgingly admitted that their OS has always been better designed from a useability point-of-view than Windows (and, sadly, Linux desktops), and that their aesthetics in hardware and software design are way better than any other company's. And, despite what a few earlier commentors have posted, Apple's hardware is usually quite good (with the exception -- up until the introduction of the G5 -- of their processors which have largely sucked. Thanks Motorola!).

I'm a Linux user at work and at home and will likely be replacing my home computer sometime soon. I had been thinking that I would just build a PC (Windows free) and install linux, and helping my wife and son with the transition. I now think that my next computer will be a Mac. I still don't consider myself a huge Apple fan, but what they offer is way better designed than anything else out there at this time.

I really think that Apple has driven the thin edge of the wedge between some traditionally non-Apple users and the usual Windoze OS/hardware that they would normally buy. Apple has re-invented itself in the past and, I think, innovated way more than many other companies. I think that they just might succeed in driving that wedge in further.

Can't help but think..

[p4ul13]

Every year or so we see these articles, and ever year or so it seems that Apple seems to pull through and live on for another year.

This being the case, Apple is either really dying and has just been narrowly escaping death for almost 30 years, or the "Apple is dying" article is just something the tech reporters polish off every once in a while when its a slow news day and they want to stir up some interest. Think about it, if there's nothing big and / or interesting to write about this week, why not publish the "Apple is Dying" report again to stir up the Mac fans. It definitly gets the attention of some folks while not having to produce any real news. It's a cash-cow article.

Clouds on the horizon, though

[panurge]

I like Macs, and I've bought them steadily since 1989 (recent convert, huh?). But I had to replace my laptop and I'm typing this on an Acer 1501. Yes, I'm sorry. It's heavy. But I don't travel a lot. Battery life isn't huge ( about 2 and a half hours evening use, less when working.) But it has a more than decent screen, 1.8GHz AMD64 processor, it can expand to 2G of RAM, the hard disk is easily replaceable and upgradeable, it has 2.4x DVD+RW and it will run a 64 bit operating system just as soon as I have enough drivers. (I tested XP Pro 64 last night; it found the video but nothing else). And it cost less than half what the G5 powerbook is likely to cost.

About the time Apple needs to launch the PB G5, there will be a lot of competition in the 64 bit market. OK, Apple will probably survive, but the important market share in high end laptops may be severely threatened.

And yes, I know the AMD64 is a kludge (it's like a Tomcat with a piston prop on the front), but it's a hellishly compatible kludge. I like elegant processor architectures, but this one works and works well.

I'm a "glass half full" kind of guy

[laird]

When I go to high-end tech conferences (TED, PC Forum, Pop! Tech, etc., the kind company CTO's go to) all I see are PowerBooks. Heck, and PC Forum the lone Vaio user taped an Apple logo to the lid of his computer in order to "fit in." So Apple clearly completely owns the "leading edge" tech user market, which is a good indicator of where the general market is heading. That is, if the people that build Yahoo, eBay, etc., all use Mac's, then (1) the things they build work on Mac's, and (2) they influence everyone around them to consider Mac's.

And on a more mundane level, Apple is also more profitable than almost any other personal computer company (most are losing money, Apple is profitable). Apple has figured out how to make a retail store chain work (unlike Gateway). Apple has the best brand in the computer business, the best customer loyalty, and highest customer satisfaction. Apple completely dominates the new, rapidly growing digital music sales market. And their platform is the basis for the best price/performance supercomputer on the planet. That's all got to be worth something!

What Part of the Market?

[Genady]

The question that market analysts don't seem to be asking is what segments of the market is Apple growing in?

I've seen Apple making headways into the SysAdmin space. Not as servers (though XRaid perhaps will) but as personal workstations. Just this week two die hard Sun and VMS people have decided that their next workstations should be Macs. Replacing Sun Stations.

*This* is the important bit that is getting glossed over. Apple is making inroads with the Technoarti in companies. UNIX Sysadmins at the top of the totem pole have been crying for a UNIX laptop for years and now Apple is giving it to them. One Java developer recently quoted in JDJ remarked: "I use a Mac, it's like Linux with class and QA." (or something close to)

Macs are quickly becoming the status symbols of the technical shamans in the backroom. It's not hard to imagine that from there the jump to the CIO and the board room is not far off.

This is what looking at gross marketshare misses. Apple is front-loading the desire for Macs in IT. If they can couple it at the right time (once they've penetrated into the SysAdmin/CIO segment) with inexpensive corporate-type desktops... the world could change quickly.

If Apple can appeal on the resilience to worms/viruses and bring TCO value to corporations the future is bright.

I agree!

[Frobozz0]

From where I sit... in a predominantly Windows technology firm, we have people either switching their work computers or their home computers to Macs running OS X. I know a LOT of people in other places that are buying Mac laptops with OS X.

I'm sorry, but overall marketshare is not a death knell. Just because so many large manufacturing plants, call centers, and places like that have cheap Wintel doesn't mean Apple is dying. Look around... I bet most of you know people who are switching to a Mac. I don't know ANYONE that has done the opposite since OS X came out.

zealots

[Mr. Underbridge]

...to mod this entire article and discussion -1 Flamebait? Still, I guess Friday is a good day to have the Mac and PC zealots shouting at each other like howler monkeys.

I've often marvelled at statements like that. And let me preface this by declaring that I own a powerbook - but I have *never* met a PC zealot. PC users rarely care that muchabout the branding of their box. Most PC users care about the games on their box, or the GHz it has compared to the PC down the block. But mostly, they don't care about apple. It's always the "little guy" who has the chip on his shoulder, who is always making comparisons to the "big guy" (at least in terms of marketshare here).

These discussions aren't so much PC zealots vs. Mac zealots - it's usually mac zealots vs. the PC users who push their (our?) buttons for fun.

PowerPC is going to help here

[Junks Jerzey]

Intel and AMD are floundering at the moment. AMD is roaring ahead with 64-bits, but not in terms of performance. Arguably, we don't need a whole lot more performance on the desktop right now, but that's another topic. Over a year ago, Intel was at the 3GHz mark. Now they've moved up to 3.4GHz, at the expense of significantly higher power consumption. They're dropping to a 90nm process (Prescott), and have somehow managed to drastically increase power consumption at the same time. What!? This doesn't bode well for notebooks and small form factor boxes.

But IBM is on track to hit 3GHz this summer and cut power consumption by ~50% at the same time. The roadmap goes out to much higher clock rates, and includes multiple cores on one chip. If this happens, and in a few years we're looking at dual core 4GHz PPCs that use less power than single-core Intel/AMD CPUs, then that's a big deal.

Dell R&D Correction

[Punchinello]

Dell spends between 1% and 2% of revenues (or about $700 million annually) on R&D. This is a very modest amount compared to Sun and Apple. But to say they spend no money R&D is simply incorrect.

Apple's stock price and earnings ratio

[goombah99]

The timing of this article I think is simply intended to make the author look prescient. Apple's stock price just surged way ahead creating a ludicrous price-to-earning ratio (about 70). Part of this was the Sony-buy-out rumor, and the other was a wave of good i-pod press and g5 super computer press.

Any idiot can tell you the stock price will come down a bit since the p/E is not supported by the present facts known. On the other hand if ipod sales continue to boom and people start flipping their old mac for new G5s (by the way the imac g4 inventory is being cleared out for the introduction of some yet to be announce product). Then their earnings will go up and the stock price should rise. This is why analysts are rating apple and hold and not a sell. the price is high and will fluctuate down but may zoom up on the next earning statement.

I think this author,probably in the pay of microsoft, is planting a story anticipating the near term price fall of apple stock to make himeslef look good and maybe stimie apples encroachment on windowns in the enterprise world.

Re:At least the Rolling Stones...

[TXG1112]

I remember an old full page PSA in some magazine:

The truly evil thing about heroin is it doesn't always kill you. Sometimes it just turns you into Keith Richards.

My own theory is that he died in 1969 and nobody told him yet. Either that or he's a vampire.

Well...

[Kjella]

..it depends on whether or not the iPod/iTunes for Windows was in part done to give people a "taster" of Mac quality and ease-of-use. If Apple was planning to drive Mac sales that way, it's valid to discuss if it was successful or not.

That doesn't mean Apple should have made it Mac only, it simply means that sometimes the market does what marketing thinks it will. That is, if Apple was thinking that way in the first place, I haven't seen any official info to indicate that.

Kjella

They already decided

[System.out.println()]

Apple has decided that the 'exclusive club' route, as you call it, is best for them. As another poster noted, even if they DO lower their prices (and profit margins), people will still see "Windows has games, I'll take the Dell." Apple can't beat Windows at its game, which seems to be "ship a barely passable OS at a minimum price". Apple's game is "ship a sweet OS and raise the prices to make up for the R&D." (and then some)
I saw this quote a while ago: "I don't think BMW is complaining about their 2% marketshare. Neither is Apple."

Apple as an investment

[Doomdark]

from Money Magazine...

and little value in the stock.

Independent of whether Apple continues to operate as a company, keep in mind that from investment point of view, Apple hasn't been all that great a thing. Even when taking a long-term view (like this, comparing AAPL with dow jones since Apple's listing) main reason to own Apple shares would be to show your loyalty to company, not to make money. On medium term; over past 10 years, investing in Apple would have been even worse, and had brought you only 50% growth (and dividends are almost neglibly small). That's much lower than what is traditionally expected (somewhere slightly above 10% annual ROI).

So what does this matter? Just that from investment POV (it was written by Money mag) Apple has been a dog, and they are trying to explain why they think it remains such, even though it has good brand, got the spotlight, positive "mindshare". You may disagree, but that's their background.

Apple Demise Predicted Again

[Naum]

This isn't news anymore...

I think it's interesting though how Apple is now straddling a tightrope - I see posts scattered here about how tech savvy users have flocked to OS X and even I, in my traveling service partner gig, have sold some folks on OS X after they see me work with my powerbook (whether it be plugged into a projector and teaching classes or just using it for contract *nix work and having folks see what a joy it is compared to Windows boxes...). However, I think Apple has lost some of the old OS 9 customer base that were not so enamored with OS X. Sad, because those folks will now venture back into a world teeming with viruses, worms, spam and clunkier multimedia software.

But I think the increased usage by so referred to technorati has future blessings for Mac users or non Windows users in general. More developers flocking to the platform, even if for curiosity sakes, means more software for Mac users or more cross platform offings.

Again, the best of both worlds - a state of the art desktop GUI (yes, it has some warts still) coupled with all the *nix tools. I used to run Linux on my home desktop - it worked fine for a lot of stuff but I had difficulties with USB devices hooking in, wireless setup and tasks like CD burning - not that these were because of Linux, but still these issues had to be dealt with. OS X just works yet I get the added bonus of superior display aesthetics (and for someone like me with poor eyesight is essential) and all the *nix goodies.

* Comes with all the development tools and IDE to do Cocoa programming or cross platform Java, perl or python.

* Apache server plus PHP built in and easy to add whatever server platform add-on.

* Pretty colors and easy on the eyes fonts for all those ssh sessions needed for work and for home server handling.

* X11 and ability to run the Gimp and the whole gauntlent of free software.

When it's time for a new desktop, I'm going to get another Mac and replace the AMD box that currently sits there... ... that Wall Street and the financial barons deem Apple to be a bad stock investment phases me not. I think they can exist as a niche computing hardware supplier and etch out enough profit to stay in business. At least until the next round of monopolistic Microsoft collusion control with hardware manufacturers and media conglomerates that incorporate "trusted" DRM computing that locks out non Windows computer users...

Now with apple out of the way...

[srcosmo]

...I predict that 2004 will be the year of Linux on the desktop!

Irresponsible journalism?

[aztektum]

Isn't it irresponsible for Money Magazine with its large reader base to spread word of disaster for a company that isn't performing solely on the authors expectations?

I realize Apple stock holders probably aren't going to sell off everything in Apl b/c of this, but could it not happen some smaller company and start a chain reaction in the market?

I'll admit I'm no economics major, but with the way the markets are up/down these days this seems like a way to create havoc.

Yet another fact-distorting article

[bluephone]

I'm not even an Apple fan, and I think this article is nuts.

• "Even when you factor in Apple's $13 a share in cash and almost no debt, the company's stock, at a recent $23, trades at 20 times estimated 2004 earnings. Dell's shares, on the other hand, go for 26 times projected 2004 earnings -- but its business is three times as profitable as Apple's."

First they state that the shares are $13 per, then comment thta when it was $23 shares it was trading at a high P/E ratio, as though it's bad, but then shows how Dell has a higher ratio. And to boot, he compares earning on a fiscal year that's not even closed yet. And on top of it, Dell isn't debt free. In fact, FEW companies are debt free, but apple is. that alone makes it a great stock buy.

• "Tom Santos, one of the plaintiffs, estimates that Apple's stores would have lost as much as $80 million in 2003 had they been paying the same prices for inventory as the resellers paid."

Ok sir, tell you what, we'll have Apple charge you HIGHER prices so you don't have to complain about not going out of business.

• "And Apple's earnings would have been worse had it not been for $4.8 billion the company has in cash and short-term securities. In fact, the cash hoard made more money last year than Apple's operations -- which lost $1 million while the computer maker booked a $69 million gain on interest income."

Which is far more than any Microsoft division made last year, excluding Office and Operating Systems.

• "Out of the hundreds of people who were waiting outside Apple's SoHo store in the cold to buy an iPod, I could find only one whose positive experience with the music player led him to buy an Apple computer."

Ok, so they polled people for their experiences of devices they haven't bought yet. That's a great poll. I'd like to see a poll of people who bought Sony CD or MP3 players, to ask them if it made them buy a Sony Vaio. Or if HP's new iPod clone will make them buy an HP. That's a bogus comparison.

• "While Apple's sales of $6.2 billion last fiscal year were nearly unchanged from 1999, profits plummeted 90 percent to $69 million, from $601 million four years ago...Jobs' mass-appeal strategy has crimped the company's historically high profit margins. Apple's net profit margin is just 1 percent. That's down from 10 percent four years ago."

The margins for PC makers has been razor thin for years, it just finally caught up with Apple. I got out of selling boxes years ago due to shrinking margins. The fact that you can get multi-GHz PCs for $500 while a 1Ghz apple is more than grand doesn't help either. So let's not blame Jobs for the shrinking margins, let's blame market factors. As for shrinking profits, that's due to hardware that's overpriced.

• "Apple sold just over 3 million computers in its last fiscal year, which ended in September -- 900,000 less than it sold in fiscal 1996, the year before Jobs returned...Meanwhile, Apple's share of the worldwide personal-computer market has shrunk to 2 percent from 3.2 percent five years ago."

Ok, let's not compare this last year's performance to the year before, or any other year Jobs wa there, let's comapre it to before he arrived. Well, fine then, let's compare the other years since 1996 when Steve managed to maneuver Apple into selling far more PCs than in 1996. Let's compare how this year's sales are disappointing to last year's, to be fair. And let's factor in the lack of new product development in that part of the company's line up. They've been focusing on the consumer device market, like with the iPod mini (a smash seller). Gateway has been pushing plasma TVs and digital cameras FAR harder than PCs. Companies can only do so much at a time. Even Microsoft, arguably the world's biggest software company, can only manage an OS upgrade every 3-4 years now, and their project dates always slip every further.

I'm not Apple fanboy. I can't stand the Mac OS UI, I don't like the hand holding, I don't like the over priced hardware, I don't like the platform lock in, etc. But, let's at LEAST be fair about an examination of the company.

Re:Yet another fact-distorting article

[RockClimbingFool]

Being debt free is not a good thing. How long till people understand this? Large companies are not run like your household. Too much debt is a sign your company maybe over extending itself. Too little debt means you are not using your available cash reserves properly.

Individuals and organizations don't want their multimillion dollar investments sitting around in a savings account. Debt is a direct indication of your investors confidence in your companies ablity to make them money.

All companines have cash reserves. Very, very few companies are debt free. There is a reason for that and it isn't that is Apple is such a great company.

Re:Oh this is silly

[zhenlin]

Hm. Apple PowerMac G5:

* HyperTransport
* PCI-X / AGP
* DDR SDRAM
* S-ATA
* Gigabit Ethernet
* IEEE 1394b a.k.a. Firewire 800
* USB 2.0

So, tell me, which of these, which will be the only interfaces that you can sanely use, is proprietary?

In the PC world, anything other than an Opteron machine can compare in specs.

Ahh, the old "you just hate Apple!" reply...

[DesScorp]

"Sources? Citations? Studies? Even links to articles?"

These are friends of mine. Should I interview them and get transcripts for you?

"I have met NO Mac user to date that didn't think that OS X was an improvement on 9."

Well, then obviously you and I are talking to different people then.

"So what's your point? I think you just don't like Macs. Which is fine, but don't hide it behind unsupportable arguments and invented or anectodal evidence from your three friends."

None is invented, thanks, and if you must know, the count of Mac using friends stands at 17. Of those, 10 are classic users. Of those ten, only one of them is just dying to get OSX. He just can't afford a new Mac right now, so he has to stick with what he has. And while only one of them says she hates OSX, 6 others say they'll guess they'll have to upgrade eventually. But they're not real enthusiastic about it, at least not yet. Maybe that will change. These are also mostly older users, so maybe that has something to do with it. The last two have gotten used to Windows at work, and so have bought XP boxes for their families, and use their Macs only sporadically. They say they liked them, but think Macs are too expensive. One got a Dell, the other got an HP. Obviously, these are not fanatics (yes, there are Apple users that are not fanatics), but they ARE longtime Mac users. They don't especially like XP, they just needed new machines, and their new ones are cheap, and the kids know Windows from school.

You sound like an easily offended man, so just to rub salt in the wound some more, of those 7 OSX users I know, four are G3 Ibook users that have since added YellowDog Linux, because they think OSX is too slow on the G3. The other 3 have PowerBook G4s, and are relatively happy with their performance. As of yet, I don't know anyone that owns a G5.

So there you have it. My three friends and their invented anecdotes.

Oh, by the way, as far as me hating Macs, you're full of shit. I like OSX, it's way better than OS classic, as it inherited much of NeXT, which I always lusted after. And anytime I get a complaint about the constant assault of viruses and trojans, and people ask my advice, know what I tell them?

"Simple. Buy a Mac".

Try not to be so damn touchy.

Dell spends ~$118 million per quarter on R&D

[burnin1965]

I'm not a big Dell fan or anything, but I have noticed in their product offerings that they seem to do more than just assemble boxes. That being the case I suspected that in order for them to provide more advanced products than a simple assembled box they must be doing some R&D.

So I checked their last 10Q statement they filed with the SEC and discovered that Dell spends around $118 million each quarter on "Research, development and engineering".

burnin

Re:Oh this is silly

[ivan256]

You're also getting _propriatary_ hardware

Excluding the motherboard (and even this is debateable. Go try and get a programming manual for your VIA chip), what exactly is proprietary about the Mac that isn't about your Athlon 64? I look inside mine and see a standard AGP video card, PCI SCSI adapter, IDE hard drive and DVD drive, everyday ordinary USB ports, standard audio jacks, regular ordinary ethernet, the same memory that PCs use... I look up on my shelf and I see programming manuals for all the parts inside the machine I care about. The instruction sets of the processors are different, but everything else isn't any less standard than your machine.

Someday you'll grow up, get a job, and have way less free time to "get your hands" dirty. Your time budget will shrink and your financial budget will grow. Then perhaps you'll appreciate that you can spend a few hundred extra dollars to get a machine like a mac.

iPod is the Apple-lifestyle-leader

[lysium]

So here is a product that is successful in exactly the way that Apple intended: it is penetrating the market for Windows users as well as Apple users.

Apple's stated goal is to use the iPod/iTunes combination to introduce PC users to the OSX interface, and the Macintosh philosophy in general. Once they are familiarized they will hopefully purchase a Mac and fully enter the Apple lifestyle. If Windows users just purchase an iPod, Apple's profits will be negligible. There would not be 'red ink flowing like blood,' but there would not be any revenue growth, either.

Check the web, the words practically fell from Steve Job's mouth.

===---===

M$ is weak!

[whittrash]

Market share of what? All computers sold in a year? Follow that logic, if M$ has a slight decline in server market share that would mean they are dead! Don't get me wrong, market share is important, but not as important as making $$$$$. Also, Apple has a very strong and cool brand that many companies would kill for. It is way cooler to have an Apple product than a M$ product. Apple has a much better design ethic and produce much better products. M$ may be able to crank out technically workable gear but they got no sizzle, no funk...and therefore they suck.

As far as the ipod being a failure...what crack smoking fool thought that one up! It is the hottest player out there. It may well be true that the margins are not the same as other players, but being the best rarely means you crank out cheap crap you sell for a high price, it usually means you have the best goods.

This sounds like M$ FUD to me. They are all freaked out because Mac is taking over the music business, giving them an edge in the home user market. That threatens the M$ music and video technology. This all makes M$ look like a loser and nobody likes a loser. Apple makes M$ look bad.

Market share figures are misleading

[NtroP]

In my school district we still have entire labs using NuBus PowerPC Macs. They're, what, almost 10 years old? Guess how many 10 year old PCs we are using... Right.

We REPLACE PCs every 4 years or less on average. When we buy new PCs we are usually surplussing the old hardware. When we buy Macs we are generally ADDING TO our inventory.

So if you just look at our "market share" it would appear that PCs have 2-3 times the market share. In reality, they only have a small fraction.

My PC using friends are constantly upgrading/replacing their PCs (which they can, because the hardware is cheap and ubiquitous). To the bean-counting dweebs, each new purchase counts as "new market share" when in reality, they don't have ANOTHER PC they've replaced their original one.

I'm not saying that there aren't many more PC's in use than Macs, what I am saying is that Macs tend to be used for far longer (than I think they should be) so the stats appear skewed. One of my personal clients is still using an LCIII for cryin' out loud! Last week we actually had a color-classic in for repair. I wonder how many 286's are still in daily use today?

Remember, there are lies, damn lies, and then statistics!

(Apple==sell, SCO==buy)==WTF????

[mojoNYC]

lately (well at least before last week), many analyi$t$ have been recommending SCO as a 'Buy,' so this should tell you something...

i find it hard to believe that these Wall $treet analy$tS have any shred of credibility left anymore--not counting the last few years scandals (Enron and MCI were analyst darlings, the disgrace of Jack Grubman and Mary Meeker, among others)...

oh, wait, Martha Stewart was indicted, so that means they've cleaned up Wall Street!;>

Re:Apple's Lifeblood

[webslacker]

Incorrect. If the $150m was a settlement, Apple would've kept the money for good. Since it was just a $150m investment, Microsoft has since sold off shares in Apple at a tidy profit.

The settlement had to do with other terms.

Only on Slashdot :)

[bonch]

Yet again, only on Slashdot can:

- Apple putting out a mind-blowing GUI on top of a UNIX-like system (Slashdotters claim not to like it yet rip-off the Aqua theme endlessly for KDE)
- Apple having massive sales of iPod/iPod Minis
- Apple vanquishing all debt
- Apple executive announcing plan to increase billions of dollars for company
- Apple innovating with Expose, OpenGL rendering backend for 2D GUI, Apple actually INCREASING performance with each OS X update ...equate to "nothing can save Apple because Apple is dying." :) As far as I can tell, Apple is doing everything right. Is it possible Apple might see some sort of revival in the time up to Longhorn? Think of how many people would buy Apples if they were lowered even just as much as $200-300...

IBM will live forever?

[davids-world.com]

Well, since you're quoting IBM -- this company was at the brink of death in the early nineties. IBM was a giant but blown-up, strong but immobile elephant. Company procedures and employee attitudes where about to kill it. I can recommend Lou Gerstner's book Who Says Elephants Can't Dance?... Gerstner took over as CEO back then and is responsible for IBM's successful turnaround. But that doesn't mean its success will last forever...

Speaking of the cost of addons...

[twofidyKidd]

I went looking at iPods online today and I noticed that their price point for accessories and addons actually drives their price point on the iPod itself. For instance, I started with the intention of buying a 15 gig iPod for approx. $300, but then as I moved through the online store, I got to a point where they offer accessories. It got me thinking about what came with the 15 versus the 20 gig iPod and there are at least 2 of the 3 additions on the 20 gig iPod package that I would have bought that weren't included in the 15g package. The additions, plus tax, to my total price now put me in a position to buy the 20g iPod package for the same price (essentially). So now I'm looking at a larger capacity iPod with more accessories, for the same price as the lower capacity iPod and less accessories. And it gets worse because now going from the 20g pod package, and adding another 2 accessories with tax, now puts you in position to buy the 40g iPod package...

They obviously planned this carefully, because I think if you are looking at iPods in the first place, then the money isn't enough of a substantial issue for a move from $300 to $500. So at very little cost and effort from Apple, they've essentially priced their products in such a way that if you're really looking to buy one, you're going to go for the gold, and shell out the additional $$$.

Is Apple dying? Quite possible, but from all indications, not anytime soon.

Cocoa development

[bonch]

Developers love Cocoa. When they've gotten used to Cocoa, they wonder how they could have done things any other way.

The only thing I've seen excitement over in the same way is .NET.

Re:No, it's not

[jjares]

Actually, it's a combination of both

Slashdot says Apple's not dying...

[theolein]

The one thing that always amazes me, is that no matter how bad the news, in fact the worse the better, any article on slashdot about some Apple misfortune or bug or new product regularly gets at least twice, if not three times, the number of posts compared to the usual average of around 200 to 350 posts.

That say to me that, even though there is a fair amount of trolling, that there is an enormous amount of interest in the company and its products. And given that the pro Apple comments are usually modded up, I suspect that:

a). There is a large portion of slashdot readers who use a Mac and OSX.
b). That interest translates into the real world in buying terms, and
c). That even the MS fanboys and die hard "it's too expensive" or "port it to x86" morons would use a Mac and OSX if they could.

In summary, I think Apple is doing so well with the G5, Powerbooks, OSX and the iPod that they are THE act to follow in the IT world.

In other news

[IntergalacticWalrus]

That guy is sooo last year, talking about Apple dying. Nowadays, all the cool financial analysts are talking about the nearing death of Nintendo, duh.

This is sweet!

[Infonaut]

If I only had access to the full Money story, I could get some juicy quotes and find the name of the author. Here are a few oldies but goodies from my archive of absurd punditry:

"Stick a fork in 'em - this Apple is cooked."
Robert Thomson, Financial Post, 2/20/2003

"While praising Apple's service, analysts caution that its success won't necessarily transfer completely to the Windows environment."
John Borland, c|net news, 7/28/03

"Folks, the Mac platform is through... ."
John C. Dvorak, 1998

"The iPod, with its backward-looking feature set and dramatically inflated price, has only its good looks going for it."
Lukas Hauser, the MacCommunist, 10/23/2001

Re:Apple's Lifeblood

[soft_guy]

Linux is an operating system. It doesn't provide support for a given program. A given program is written with the intention of running on linux. Or not. The decision here is not one that Linus and the linux community make - but one that Adobe, Macromedia, and the companies that make the applications make.

This is not exactly true. I work for a company that makes a high volume software product for both MacOS X and Windows 2K/XP. We would like to make a version of it for Linux. However, Linux does not have the correct "support" for us in their OS. What I mean by this is that there is not a standard binary format for developing Linux software applications and having them work on "Linux" PCs. Instead, you have to create a different binary for every version of every Linux distribution. This is a nightmare. The Open Source guys get around this by just shipping source code and having the user compile it themselves. We do not have that option for a variety of reasons. One of which is that we have some algorithms in our product that has military applications and we've been going back and forth with the DOD regarding these algorithms. I'm not directly involved in those discussions and IANAL, so I don't know a lot of details about it except to say that we will not be shipping source code.

Until Linux gets some support for an executable format that can work on all versions of Linux, we won't be shipping a Linux version of our app. Obviously I don't expect miracles. I'd be totally willing to have support only for x86 Linux (i.e. I get that Linux on PowerPC could not run the same executable and I know there are Linux solutions for a variety of chipsets), but if Apple can have one executable work on OS 8.6, 9.0, 9.1, 9.2, 10.0, 10.1, 10.2, and 10.3, then I ought to be able to run the same app on the same PC whether it running RedHat or some new rev of RedHat, or Suse, or any other Linux distro. It ought to be more like developing for WinCE which supports multiple chipsets, but the same app works on two different devices if they have the same processor family. I also believe that if you do the right things (i.e. use documented calls), you can write an app for CE that works with newer versions of CE. Every other platform I've developed for is the same way. Older well written apps work with newer revs of the OS with some rare exceptions. Linux needs to behave that way or you will continue to not have commercial development.

If you're OK using Gimp instead of Photoshop, more power to you! If you don't *want* versions of commercial programs, that's fine by me. Linux and Open Source are wonderful just the way they are, but don't bitch that you don't have commercial developers lining up when Linux goes out of its way to make it hard for us to deliver software in a manner that is acceptable to us.

PC's will keep Apple alive

[joel8x]

Every day one of my user's asks me for advise about buying a new computer, and each time I explain to them why they need a Mac.

The #1 reason is that there are no virus problems on a Mac, and no major problems with spyware, malware, and general browser hijacking. Having someone like me come to their house to clean out their PC will cost them much more over all than if they had just bought a Mac in the first place.

The #2 reason is the digital hub aspect. Adult's want mostly the same things from their home computers: Music, Digital Photos, Email, Internet Access, and Instant Messaging. All things that a Mac does better or the same as a PC minus most of the security woes and difficulty of setup. Most of the stuff they want to do will work right out of the box, nothing to install or mess with.

The #3 reason is investment. After 3 years, you can sell your Mac and still get a lot of money for it. Try selling a 3 year old PC and you will get a fraction of what a Mac resells for.

So, in conclusion, I see that as Windows gets so bad that I spend 3/4's of my day cleaning out spyware, viruses, and restoring hijacked machines to a workable state, people will start to get tired of it and turn to the best alternative. And I will be there ready to give them directions to the nearest Apple store.