“Apple needs to deliver astronomical unit growth merely to stand still. Its initial steps into the mass market have been so successful that Wal-Mart has started to stock iPods. That probably says all one needs to know about future price trends. Year-on-year, iPod shipments rose 620 per cent, but revenue only increased 340 per cent. Similarly, average selling prices of its once posh computers fell 5 per cent in the last quarter alone, more than halving the revenue impact of unit growth,” The Financial Times reports.

“Not so long ago, Apple was a niche player with an uninspiring, but relatively stable business. Its very success now leaves it at the mercy of fickle mass-market fashions and consumer confidence, in sectors where any successful product is inevitably and swiftly imitated by cheaper rivals. In the longer term, mobile phones might well become the device of choice for music downloading. In the short term, glitches as it starts sourcing chips from Intel remain possible,” The Financial Times reports. “Sensible people might see any of these factors as a good reason to refuse putting its current magnificent income stream on a high multiple. Yet Apple continues to trade at 27 times this year’s earnings, after adjusting for both its cash pile and option expenses in line with past trends. More worryingly still, for what is now essentially a consumer electronics company, it costs twice its sales. With such a ripe valuation, it appears only a matter of time before this apple falls.”

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MacDailyNews Take: It’s only a matter of time before the sun burns out, too.

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