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It’s all about the iPod?

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By Dennis Lloyd

Publisher, iLounge
Published: Thursday, March 18, 2004
News Categories: iPod

“Digital music player has been touted as a saviour. But are the numbers sustainable? [...]

Mr. Milunovich [analyst at Merrill Lynch & Co.] calculates that iPod and iTunes will contribute about US15 cents a share to Apple’s earnings this fiscal year, rising to US25 cents a share and revenue of $US2-billion by 2006.

But, as in the past, don’t expect it to be all clear sailing for Apple. Critics say the technology firm is going out on a limb by concentrating so much of its future on the iPod and the online music business, which is still in its infancy.

During the fiscal first quarter of 2004, 53% of Apple’s retail segment sales came from iPod, or other branded and third-party peripherals, software and services.”

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Comments

1

This is just Apple’s ***current*** big thing. I can’t wait to see what they make next that will make the iPod seem insignificant.

Posted by Wolf on March 18, 2004 at 12:12 PM (PDT)

2

Boring….

Posted by Can You Say on March 18, 2004 at 5:40 PM (PDT)

3

I can see the problem with Apple though, the G5 is not really selling all that great and the iMac while cool has already kind of lost it’s coolness or must have.  Apple must find a way or reason for people to adopt more of their desktops.  The G5 is still way too expensive for the average consumer.  Most people are buying PCs for under 1000 dollars complete.  Apple must find a way to make a sub 1000 dollar desktop for the masses that does not skimp in comparison to the 1000 dollar Dell computers.

I see Apple getting out of the hardware business in the future though and selling primarily software and peripherals.

Posted by Carl on March 18, 2004 at 11:33 PM (PDT)

4

The most important thing that makes Apple successful is that it’s not cheap and competitive on the Windows market.

Apple is not looking to receive more than even 30% of the market share in desktop PCs and laptops. They may seek up to 20% but the issue is the same debate between VHS and DVD. You pay for quality and it’s worth it.

By lowering their prices, they are no better than Windows and Jobs doesn’t ever want to be in that same category. The 5% they have now is a solid 5% (the profits are still high).

Microsoft makes change affordable and the commitment from users is about as stable as hydrogen. The only thing that keeps them with M$ is not the price, it’s what they’re used to. People are afraid of change no matter how affordable it is.

On Apple’s side, change is not an option. Once you get plugged in, the only change you want to make is getting the bigger, better, faster. That 5%, once they tap into the power of a Mac, will never go back, with few exceptions. Even more, they’ll tell their friends.

The best thing for Apple to do is stay steadfast and uncompromising in their approach because it’s stable and growing. When they do compromise, it becomes about the money and Apple will no longer be all that it really is.

Posted by Wolf on March 19, 2004 at 8:44 AM (PDT)

5

A company does have to concentrate on money, profits are everything when you have to maintain a certain percentage of the market share.  If you do not maintain a decent market share then software makers will not waste man hours and money developing software for the mac.  That is why most games come out at sometimes a much later date for the Mac because they go where the percentages and profits are, it is pure simple business sense.  Apple needs to push desktops in order to survive.  I know people buy the iPod but their desktop market is suffering.  Only when they made the iPod available for the PC did sales take off.
Apple was counting on the iPod to make people switch to the Mac which it did not.

Posted by Carl on March 19, 2004 at 10:22 AM (PDT)

6

If Apple lowered its pricing on computers to a level comparable to other cheapie vendors, they’d have to sell 3 times as many to end up with the exact same level of profit.  That sounds like an awful lot of effort and logistical headaches to not really get anywhere.

Strikes me that more and more software developers are supporting Mac, since the release of OS X, which is undeniably tight.  This is a platform on the upswing, not vice-versa.


—-
http://thewired.blogs.com/teotwawki
the techno-mediated cultural conspiracy

Posted by Nicky G on March 19, 2004 at 11:37 AM (PDT)

7

I love the iPod (have a ‘40), I admit that it’s a huge hit and has added hugely to Apple’s EPS, but I’m concerned about their focus on ITMS/iPod over hardware.

Hardware is still critical to the company’s future.  I could live without my iPod, but would never use a computer again if I had to part with my Mac (I’m a PC virgin, proudly).

http://homepage.mac.com/cherrypop/

Posted by matthew on March 19, 2004 at 8:55 PM (PDT)

8

I think to say Apple is not focused on hardware is not calculating all the facts. The company is divided into different departments. Software, hardware, accessories, music, general business, etc. I don’t think their putting all their apples in one basket (I couldn’t resist!).

Right now, their success with the music industry is the forerunner to their business, but not the sustainer. The music business of Apple may plateau, but it will plateau at a very high number.

While all this is going on, the other departments are steadily keeping up their end of the deal. Last year was a big hardware year, in case everyone forgot about the G5. No it didn’t sell like iPods are selling, but it sold as expected and still selling.

G5s target a small demographic, but that demographic is growing with stability (remember the tortoise and the hare). And the numbers still add up very high. There is no emphasis on hardware at this very moment because they are still selling last year’s product.

For those who aren’t in graphics or video, this may seem insignificant. Ever hear of FCP, Shake or, heck, Adobe PhotoShop? These are defining examples of the power of Apple hardware. Industry leaders know that.

For Apple to stoop to the M$ level and market to gamers and Web browsers would be a threat to its stability. That’s a business they’re not really after and for good reasons too. Did you know Adobe develops for Apple first and then Windows? What’s more important, tools or games?

Posted by Wolf on March 21, 2004 at 6:54 AM (PDT)

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