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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.'"
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.
You are in error. No-one is screaming. Thank you for your cooperation.
Here, you won't have to sell your sole to read it:i ntro_ ipod_0404/
http://money.cnn.com/2004/03/17/markets/free
-Aaron Mitti
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?
Visit Jonesblog and say hello.
Going out of business for over 28 years
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.
Trolling is a art,
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.
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.
Visit Jonesblog and say hello.
"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... =)
"My mother never saw the irony in calling me a son-of-a-bitch." - Jack Nicholson
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
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.
Check out the best P2P sharing website: MEDIACHEST.COM
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.
When I am king, you will be first against the wall.
...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
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.
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.
My Other Computer Is A Data General Nova III.
OS X is based on BSD....
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.
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.
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.
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 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.
#include "cunning_plan.h"
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!
Enable 3D printed prosthetics!
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.
What if it is just turtles all the way down?
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.
I will not be pushed, filed, stamped, indexed, briefed, debriefed, or numbered. My life is my own.
- "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.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.
jX [ Make everything as simple as possible, but no simpler. - Einstein ]