Apple - the new Sony?

[veronica 2]

http://www.guardian.co.uk/online/comment/story/0,12449,1202111,00.html

 

Interesting article, below copied (with permission from Dennis )

 

-----

 

Apple now sells more iPods than computers. Ashley Norris wonders if it is now set to become the new Sony

 

Saturday April 24, 2004

 

 

One of the most interesting sites I have come across in the past week is the Mac Observer's Death Knell Counter. It is a log of all the times that journalists have penned stories predicting Apple's demise. It is a lengthy list too, with 39 entries going back to 1995. Writing off Apple is clearly not a clever thing to do.

 

While I am not certainly not intent on joining that list, I think it is worth highlighting a sense of unease among some analysts over Apple's financial results, which were posted last week.

 

They certainly made for interesting reading. After decades of building a business around elegant and innovative computers, Apple has now arrived as a true consumer electronics brand, selling more iPods than PCs in the last year. In the months up to the end of March it shipped 749,000 computers compared with 807,000 music players. Sales of iBook notebook computers climbed 48%, while Power Mac computers increased 19%. Overall it achieved revenue growth of 29% year-on-year. It all sounds very impressive until you delve behind the sales figures to uncover that Apple now only has 1.7% of a booming US computer market - leaving it way behind rivals Dell and Gateway.

 

So maybe Apple's future lies in consumer electronics? The short-term future for Apple in the market looks very bright indeed: " iPod" has replaced "Walkman" as the shorthand for a personal audio player, and the iPod mini looks set to extend the reach of digital music players into new territories, for if the US press is to be believed, the mini was snapped up by almost as many women as men when it launched in February.

 

The big question is how long Apple can maintain this remarkable growth in this sphere. Some analysts subscribe to the view that Sony should have cleaned up in the hard disk audio personal market, but instead gifted the market to Apple. The Japanese company was apparently prevented from launching a rival hard disk-based player by its music software division; it also didn't want to launch a product that would rival its own MiniDisc and MemoryStick storage formats.

 

That's in the past, though. Dismissing Apple as "a one trick pony", Sony Electronics' CEO recently announced the company's intention to launch a rival hard disk based player to complement its music download service Connect (a rival to Apple iTunes), which will debut in the UK in the summer.

 

Apple also has competition in the hard disk audio player market from consumer electronics big hitters Philips and Samsung, while Microsoft is readying its Portable Media Center products, which include a three to four-inch screen video playback facilities.

 

There are questions too about how long the hard disk music/video player market will last for. Surely when flash memory cards become inexpensive and capable of holding many gigabytes of data, hard disk players will disappear. From a European perspective, I admit the Americans have a different take on this, it is hard not to imagine that within a decade most people will be listening to music on the move via a player on their mobile phone. Why carry more than one gadget?

 

Not everyone is prepared to write off the hard disk so quickly.

 

Rob Pait, Director Global Consumer Electronics Marketing at hard disk maker Seagate, believes that "it is a matter of conjecture as to whether flash memory will serve as the basis for current segments dominated by hard disks", citing "higher bitrates for better fidelity and shrinking form factors" as the hard disk's trump cards.

 

Of course, having ventured once into the world of consumer electronics, Apple could well do it again. There were rumours that a video version of the iPod was shown to analysts back in January 2003 but pulled, as Apple didn't feel that there was a large enough market for it. If Microsoft is successful with its Portable Media Centers, Apple may resurrect the player.

 

We shouldn't rule out an appearance of an iPhone either. This would be tricky for Apple, though, as it could not realistically launch a worldwide model due to differing network standards. It would also be entering an already-saturated market where, as recent Nokia financial results havehighlighted, the returns aren't as great as they once were.

 

Whatever Apple does, it is essential that it maintains its position as a PC manufacturer. In the long run, Apple needs to not just maintain its market share of computers, but also deliver products, such as the original iMac, that attract Windows users. No matter where it goes in consumer electronics, a high installed base of computers running its proprietary operating system is essential to keep punters hooked to its brand and its products.

 

Not everyone believes Apple can pull this off this off. US analyst Andrew Neff suggests the company has an "inability to capture a wider customer base and grow market share with a more compelling product offering to attract new users and penetrate the Wintel world".

 

Conversely there are analysts such as Federico Bolza from Capgemini, who believes that "Apple has everything to gain from owning less than five percent of the PC market. The Windows-compatible iPod is opening the eyes of many Windows users and Apple can make a strong case for converting those that have been seduced by the iPod's sleek charms."

 

So is history on Apple's side? The company has continually amazed the business world by delivering stunning products that have rejuvenated both the brand and its fortunes. Only a fool would bet against Apple boss Steve Jobs hiding something special up his sleeve.

 

----

 

Happy Saturday evening all!

[HoTRoD 2]

I hope they do make more things like this, the ipod really is a sexy little thing. Looking forward to the future