“The fashionable iPod has made Apple Computer beloved on Wall Street. But its success masks an erosion in the company’s profitability… The bulls hope that the introduction of Intel chips into Apple computers this year will drive Apple’s share of the personal computer market from its recent 2.5% back toward the 10% it enjoyed 15 years ago. Another hopeful thought: Because only 8% of U.S. households own an iPod, Apple can sell a lot more,” Michael K. Ozanian writes for Forbes. “But once you turn down the hosannas on the music player, you are left with a company with no hammerlock on the technology (Creative holds the patent to the interface for MP3 players) and no unique operational advantages (such as Dell’s made-to-order computers).”
Full article here.
MacDailyNews Take: While reading the full article, keep in mind that Ozanian shapes things in keeping with the overall theme of his article. For one example, just from the bit quoted above, note the “Creative holds the patent to the interface for MP3 players” statement. As analyst Roger Kay, president of Endpoint Technologies Associates, stated last month, “Getting a patent agency to say you have a patent is one thing, but getting a court to say that it is enforceable is something else.”
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Apple’s Mac OS X, Safari web browser show significant market share gains in 2005 – January 05, 2006
Apple portables set to grab share in 2006 with projected 42-percent unit shipment increase – December 19, 2005
This makes no sense, even on face value. When Apple was “beleagured,” it was still profitable. They even managed to squeek out a profit on the Music Store.
It’s almost laughable how everyone is waiting for a major stumble that just seems more and more unlikely to happen anytime soon.
I am now an analyst, and here is my first shot at it:
I predict that at some point, things will get worse.
I think my fellow Mac brother Ampar said it best,
“Apple, going out of business for the last thirty years and counting…”
Or something to that effect!
i predict that the sky will fall, billy gates will become a saint, and steve jobs will be flipping burgers. sure, why not; this is just as likely to happen as anything else, right?
I like how people don’t read the whole article but then act like they know exactly what the author was trying to say.
No advantage huh? How about 83% marketshare and record profits and the best overall music buyingand listening experience in the business as no advantage. What player is being specifically added as a car manufacturers accessory, iPod. Not creative or anyone else. Oh and Macs are selling at an all time high and it’s not just the iPod that’s driving that if at all. The iPod can be used with PC’s exactly like the Mac so I strongly believe that Mac sales are being driven by Microsofts lack of security and so many viruses and spyware. Put that in your hammock and smoke it buddy. Creative has a patent with nothing to back it up with. Just a piece of paper.
Close enough, MacDaddy-Oh!
Apple can now move the other way into leaguering, as in siege. Jobs dressed as Braveheart for the next keynote?
Also, this 2.5% marketshare is bunk. Last I heard, it had gone to near 5%. And even this, I think is misleading… But this “tiny, little Apple” thing had got to stop.
They make less on each iPod, But they’ll make it up in volume. Apple has ALWAYS been about profit.
First of all, 2.5% isn’t quite right now, is it? More than 4 % in the US and 3-something globally.
Secondly, instead of the mythical Osborne-effect, Apple has still been able to sell more than a million computers, while lots and lots are holding off their purchases to see the Macintels arrive.
Thirdly; it is still probably that Apple is working to show how the media centre should be done; intuitive, simple, click’n’go. That is my analytic prediction:)
Well, here they go again – more drivel about market share and playing down the success of a company that threatens the status quo.
Forbes has got a downer on Apple at the moment. There are other articles and video which are also trying to playdown Apple.
Bit of hopeless game, cos the positive spiral is now underway…strap yourself in for the ride of a lifetime..
Forbes is concerned that Apple has reduced its R&D budget: good for them, the reason I suspect is that they’re stuffed full of ideas and it’s just a case of roll-outs as and when they’re ready.
Anyone else wonder that Google is a bit miffed that they haven’t engendered the same appreciation from customers as does Apple?
As a magazine Forbes sucks, Money and Fortune are much better. Forbes is a rah rah club for CEO’s and I’ve often found their economic predictions were flat out wrong, not surprising since they ran contrary to Money and Fortune.
um ok first of all it’s 4.5 % not 2.5%
I lvoe how depending on what article you read, the market share dour jour seems to appear. 4.5% nimrods.
Secondly The jury hasnt even deliberated on that Cretive patent.
Thirdly, not operational advantages? Obviously never touched a Mac. Another example of someone who sees a Lexus and a Pinto and sees two cars and nothing else.
This guy must use a Smith Corona to type his articles complete with white out.
I’m always suspicious when analysts start quoting percentages and not dollars. Creative has higher R+D spending as a percent of sales? Yes, but what is that in real dollars? There is only so much that can be spent that way. “Hey guys I made 10 bucks in sales, and am spending 5 bucks of it on R+D!” Wow, 50% of sales is spent on R+D, what a fantastic company!!!! 5% of a billion is a lot more than 10% 0f a million. Maybe the writer has some money riding on short selling?
“Also, this 2.5% marketshare is bunk. Last I heard, it had gone to near 5%. And even this, I think is misleading… But this “tiny, little Apple” thing had got to stop.”
I agree. In the very next article on MDN the writer refers to ‘tiny Burst’.
Ok, so who’s tiny and who isn’t?
Let me expand a little on my previous statement. July 1987 Money predicted a major downward correction in the market. August 1987 Fortune predicted the same thing. October 1987 (which was on news stands in September)Sylvia Porters Personal Fianance had 8 or 10 pages that would scare the pants off of anyone invested in stocks. In October there was a little something called Black Tuesday, people were jumping off of the roofs of tall buildings. Must have been Forbes readers since they said the world was rosey and stocks were set to make big gains =).
This is good. I was afraid the Apple Death Knell had gone out of fashion. Good to see it’s making a comeback. This is like the second or third in the last two weeks.
I took the time to actually read the article now, and phrases like this put a wry smile on my face: “But computer sales were up only 27%”
Only? When the mythical Osborne-effect was about to doom Apple forever. This article appeared more like a hopeful candidature to the Death Knell.
It is quite strange how some people simply cannot believe their senses and their minds; Hm. This success is simply too good to be true. They are doing too well. Something fishy must be found here. Hm.Hm. Har d to find but let us just see now; if maybe perchance this would be true then…
What they don’ see is the very special situation Apple is in versus Microsoft and Windows, historically and at present. If they studied the success story of MS – which they have no problems in swallowing, obviously – they would see that something isn’t right. How is it possible that a mediocre product, based on sloppy coding and shamelessly ripping off other products, can end up totally dominating a market? And is that good for the end user?
Neither do they see that most of the errors they love to repeat Apple has done in the past, were done after Jobs was ousted and likewise, they have difficulties in seeing the deliberate and slow turning of the tides after Jobs returned.
If they could catch a glimpse of that, their predictions and analyses would probably become a lot more interesting. Well, more and more seems to be able to see the big picture now.
It is of course too early to tell whether Apple will succeed but I’d say that their strategy is good and the tides are turning…
Speaking of the “Death Knell”…
http://www.macobserver.com/appledeathknell/index.shtml
BAH!
Onzanian knows Apple stock is about to split, so he’s just trying to drive the price down a bit to pick up some more before it recovers and then splits. We’ve seen this before — some analyst comes out with something bearish and ridiculous that’s either a statement by a complete loony or someone trying to squeeze in a few more shares for his money.
As most tech writers know, a whole lot more than 2.5% of statistics are made up on the spot. Come on people, these poor slobs have tight deadlines. They can’t spend precious column-filling time checking facts even with a simple Google search. Their only goals are to get you to go fuzzy, tilt your head a little like you understand and avoid drooling on your keyboards. That buzzing sound is perfectly natural.
These are the Forbes’ articles in the last 2 days. They have been busy, but it seems to me they might aim to promote some consistency…
One More Thing (At Least) For Apple
A Win-Wait For Apple
Apple-Intel Alliance ‘Very Positive’ For Both
Now It’s Jobs’ Job
A Win-Wait For Apple
Apple Likely To Outperform Competition For Years
Macworld Aftershock
Apple Is A ‘Top Pick’ Based On Continued IPod Momentum
This Apple Is Too Shiny
Apple’s Mac Sales Momentum Seen Waning
Adobe Set To Compete With Apple
At first I thought it said, “iPod masks an erection in Apple’s profitability.”
Is that even possible?
MW: member, as in now I remember
Software, You Nitwit!
Any analysis of Apple without a mention of software is woefully inadequate.
Software margin is very, very, very high at Apple, where it’s all rolled into the R&D basket. As marketshare increases, so does the margins from software sales.
This author is a nitwit.
PS In October 1987, the stock market crashed. One month later it fully recovered. All them 1987 computers were tripped at once and they unloaded everything. Doesn’t even compare to the market crash of 2000.
PPS A stock such as AAPL is massively traded and very efficient. I believe 30 Million shares traded in one day is a better indication about Apple’s future than some nitwit writing inaccurate articles.
What an idiot.
“share of the personal computer market from its recent 2.5% back toward the 10% it enjoyed 15 years ago.”
Actually, approximately 15 years ago was the peak in market share of 19.2% — NOT 10%. (Look up in your old MacWeeks of that era and it’s there.) And… “recent” market share has been quoted as 3.5-4% by most market research firms — NOT 2.5%. — a clear case of the author (and editor and fact checker — they employ one of these don’t they?) not doing their jobs.
“Creative holds the patent to the interface for MP3 players”
Creative has been issued a patent for one specific type of music player interface. It does NOT cover ALL music player interfaces. It does not hold THE patent to THE interface.
Additionally, MDN’s take is exactly correct. In fact, a about a decade ago the U.S. Patent Office issued a patent for a particular kind of orbt about the Earth. If you accepted the validity of the patent then no other company could place satellites into this particular kind of orbit for the life of the patent (then 17 years after final issue [which through various techniques allowed at the time could have been several decades]). Clearly patenting an orbit about the Earth so no one else could put something there is ludicrous.
Imagine if Arthur C. Clarke had patented the “Clarke Belt” (aka geostationary orbit)? Using techniques of the time he could have made it impossible for anyone to put up any of the satellites we take for granted today without paying him billions of dollars. This is why patents for things that are technologically straightforward are not upheld in the courts.
As a patent holder and working with a few companies with significant patent intellectual property, I’m often told that the value of the patents and IP is zero until the courts (NOT the USPTO) upholds the patents.
And one last thing before I get off my soapbox today…
“no unique operational advantages (such as Dell’s made-to-order computers).”
What the hell does Mr. Michael K. Ozanian thin Mac OS X is? If that’s not an operational advantage (being able to tailor both the OS and the hardware to work seemlessly together) nothing is!