SolveYourProblem
eLearning Series
iPods & MP3 Players
Apple's
Growth: Mac & iPod
by my-tech-guide.com
Apple Computer was one of the pioneers of
the PC industry and remains so today. It is one of the largest
computer companies in the world, with sales of $13.9 billion
in fiscal 2005. Apple designs, manufactures, and distributes
a host of computer and related products, including desktop
computers, notebooks, servers, and storage arrays, along with
its own proprietary operating system and applications. In the
past few years, Apple entered the music marketplace
with its popular iPod music player and iTunes Music Store,
which sells
legally downloadable songs. Apple currently dominates
the markets for both of these products.
Furthermore, Apple is scheduled to come to market over the
next few months with several new products that should
garner significant attention and drive incremental business. Apple
also chose to control a greater percentage of its product distribution
due to the differentiated nature of its products, a strategy
that has been successful to date and may have played a key
role in the company’s ability to hold PC market share in two
of the past three quarters after consistently losing share
in the marketplace for each of the past four years.
Our analysis indicates iTunes
has the potential to be somewhat accretive to the overall business model if downloads continue
to increase at their current pace and Apple can increase the
number of songs downloaded per session, which would leverage
the fixed credit check costs the company incurs per order.
However, industry experts believe it will add only a few pennies
to the bottom line as Apple continues to reinvest in the business.
The main value iTunes brings to Apple’s business is increased
awareness of Apple’s products and Web site traffic, which Apple
can use to cross-sell its other products, especially iPod.
Understandably, Apple wants to avoid selling PCs at a loss,
but unfortunately the growth prospects for $1,000-plus PCs
are limited. This presents a conundrum for Apple longer term,
but for now it maintains its current strategy. Incidentally,
Apple’s revenue share has held much better, and while this
is not an often-discussed topic, revenue share is probably
more important than unit share. With regard to the compatibility
of Windows and Mac OS X, even though Apple made a concerted
effort to educate consumers about the ease with which these
two products work together, it has fallen on deaf ears for
the most part. Apple made some progress through its retail
stores, where it estimates half of Mac purchases are from first-time
buyers, but for Apple’s stock to work over the long term, the
company needs to maintain share against Windows, at a minimum.
On a brighter note and possibly a sign of things to come,
Apple reported strong Mac growth in its June quarter and held
share. The June quarter is seasonally slow for most computer
companies, but it is the education buying season, a market
where Apple is regaining lost share. One quarter does not make
a trend, but this may be a direct result of the increased awareness
iTunes and iPod have brought to the Apple brand.
# # # # #
SolveYourProblem.com : 2007
> Home > iPod
& MP3 Player Articles: Main Page |

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