BusinessWeek: Apple’s niche is safe; Mac maker ‘innovation leader’

“Going by the numbers, Apple Computer Inc. (AAPL ) appears headed for trouble again. While CEO Steven P. Jobs engineered a remarkable comeback after retaking the helm in 1997, one-time expenses, such as plant closures, have pushed the company into the red for two quarters running. For the one ended Dec. 28, Apple reported a net loss of $8 million on revenues of $1.47 billion, vs. a profit of $38 million a year ago. Worse, Apple’s share of the U.S. PC market is hovering around 3.5%, according to IDC analyst David Daoud. That’s down from 13.4% a decade ago and 4.2% in the year after Jobs returned.

But fear not, Mac faithful: Apple may never again pose a threat to Microsoft Corp. (MSFT ) and its PC allies, but its niche is safe. In the $160 billion PC market, a 3% market share should be enough to fund Apple’s research-and-development push. So long as Macolytes keep paying Apple’s high prices, its 28% gross margins should far exceed PC rivals–especially if it keeps expanding its portfolio with non-PC products such as the iPod MP3 music player. ‘The battle for market share ended 10 years ago,’ says UBS Securities analyst Don Young. ‘But there’s a place in the PC world for an innovation leader,'” writes Peter Burrows for BusinessWeek. Full article here.

30 Comments

  1. you can get the same features on the PC for less. It a plain and painful fact. go to Dell’s site and spec the Dimension with all the SAME features of the imac PLUS the ability to add internal drives and cards, PLUS sound in and a floppy, add speakers and RAM to both and the Dell can be had for 400 less. Its just not very pretty or elegant.

  2. The price argument is silly. I went onto Dell.com and built the following system, I included Office, home installation, DVD burner, 17″ LCD, and more. Total price with free shipping: $1457.00 after a $100 rebate.

    Dimension 2350 Series
    Qty: 1 Price: $1,407.00

    Pentium� 4 Processor at 1.80GHz with 512K L2 Cache
    Memory: 256MB DDR SDRAM
    Monitor: New 17 in E171FPb Flat Panel Display
    Video Card: Integrated Intel� Extreme 3D Graphics
    Hard Drive: FREE Upgrade! 40GB Ultra ATA/100 Hard Drive
    Floppy Drive: 3.5 in Floppy Drive
    Operating System: Microsoft� Windows� XP Professional w/ Microsoft� Plus!
    Network Interface: Integrated 10/100 Ethernet
    Modem: 56K PCI Data/Fax Modem
    CD Drive: 48x Max CD-ROM Drive
    DVD Drive: New 4x DVD+RW/+R Drive w/CD-RW
    Sound Card: Integrated Audio IS
    Speakers: New Harman Kardon� HK-206 Speakers
    Bundled Software: Microsoft� Office Small Business w/ Money 2002
    Security Software: Dell SecurityCenter by McAfee
    Limited Warranty: 1 Year Limited Warranty plus 1 Year At-Home Service
    Installation Services: PC Home Installation plus Data Migration; Regular Hours
    Internet Access Services: 6 Months of America Online Membership Included
    Mail-in Rebate: Save $100 with mail-in rebate. Price shown after rebate

    I would spend another $200 to upgrade the sound and the video. So total real cost is $1607.00. Remember I really piled extra stuff onto this. I also get a 1.8Ghz processor vs. 800Mhz (yes they are comparable in speed)

    The 17″ iMac w/ SuperDrive cost $1999. It comes with one disc drive, a bigger hard drive, and after I upgrade the Dell with better video and sound less performance in both. I just saved $392. For that I could have added more another 256megs of Ram, a 120G hard drive, and still spend less then the iMac. If I only upgrade the video card I save a couple hundred dollars.

    The point here is that the price argument is a waste of time. If you focus on quality, usability, and not sucking up to the Micro$oft way, then a Mac is priceless.

  3. The current market share shows that Apple has lost the OS war with Mac OS 9, which has indeed no future in today’s computing environment mostly controlled by Microsoft. Fortunately, and not only for Apple, things have changed with Mac OS X and you’d better look at what you can do with a Mac today than rely on the market share. Beside of the price argument which is pointless, I see very few reason why you should use a PC instead of a Mac. I really think that the Mac (with OS X) is a viable platform and has a future… provided that some people could be less obtuse. Who wants Microsoft to control 100% of the market?

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