iPod success opens door to Mac OS X on Intel
Thursday, March 04, 2004 - 08:44 AM EDTBy SteveJack
"Apple Computer's iPod has revolutionized the digital music business. Now, some observers wonder if the hip consumer gadget could do the same for Apple itself," K.C. Swanson reports for TheStreet.com. "Most investors still treat iPods and Apple's related online music venture as a sidelight to the flagship computer business, which accounted for 63% of Apple's sales in the latest quarter."
Swanson reports, "But Merrill Lynch analyst Steve Milunovich argues the iPod could help put Apple back on the consumer tech map and "become relevant again thanks to its tech know-how and strong brand." (Apple sold 2% of worldwide computer units in 2003, according to Gartner Dataquest and Merrill Lynch.) In a recent note Milunovich predicted iPod sales could approach $1 billion in the current fiscal year, or about 13% of Apple's projected annual sales of $7.5 billion."
"Milunovich believes iPods will contribute 15 cents of Apple's projected total EPS of 50 cents for fiscal year 2004 ...sales of the portable music players have taken off amid the expansion of Apple's retail store base. The company has opened 76 retail stores since May 2001, and there's reason to believe iPods are attracting more foot traffic to the outlets, where customers will be exposed to Apple's sleekly displayed, consumer-friendly computers. Milunovich believes the music players could even create a 'halo effect' that prompts Windows users to switch to Macs," Swanson reports.
This is all very interesting, but I believe analysts and others are missing the big picture: iPod success paves the way for Mac OS X on X86. People have argued for years for and against the release of Mac OS X on Intel (and AMD) commodity hardware, but Apple derives such a large portion of its revenue from hardware that doing so could potentially damage the company beyond repair. But, what if Apple replaces that lost Mac hardware revenue with iPod revenue?
Steve Jobs would then be free to drop what amounts to a hydrogen bomb on Microsoft. Mac OS X that runs on "regular" off-the-shelf x86 hardware. Or partner with a Sony, for example - to insure quality. Years before "Longhorn" even comes close to shipping. Moo.
Sell enough iPods and the OS war is on again in a big way - and for real this time. Steve Jobs knows this and that's why, right now, iPod is much more important than Mac hardware to Apple Computer, Inc.
SteveJack is a long-time Macintosh user, web designer, multimedia producer and a regular contributor to the MacDailyNews Opinion section.


And maybe Apple could use the profits from the iSight to write NewtonOS X!
Gimme a break. Why do pundits keep contemplating Apple dropping the hardware part of their business? Part of the reason why people like Macs is because Apple makes the whole widget - you don't have to worry about getting a kernel panic because you're using an ASUS mobo with the wrong chipset.