Financial Post: Apple ‘going out on a limb by concentrating so much of its future on the iPod’

“After reinventing itself twice in the past decade, Apple Computer Inc. has emerged from the latest tech wreck with a new look and in sound financial shape, well poised to once again become a US$10-billion company,” Stephen Miles writes for The Financial Post. “The company’s stock, up 21% this year, is near a three-year peak and is up 101% from its low of US$12.72 set last April.”

Miles writes, “Apple is riding a wave of euphoria generated by the success of its highly popular iPod digital music player. The iPod has a 55% market share and has become an industry standard for playing MP3s sold and distributed via the Internet. The company’s co-founder and chief executive Steve Jobs has been hailed a hero by investors for steering the often-maligned firm on a new course that some say could see it recapture the giddy heights of its glory days.”

“But, as in the past, don’t expect it to be all clear sailing for Apple. Critics say the technology firm is going out on a limb by concentrating so much of its future on the iPod and the online music business, which is still in its infancy,” Miles writes. “During the fiscal first quarter of 2004, 53% of Apple’s retail segment sales came from iPod, or other branded and third-party peripherals, software and services.”

“Still, to the legion of Apple fans — and that includes a good deal of the investment community because of its recent results — expectations are for Apple’s good times to continue. But a company is only as good as its last set of financials, and it would only take one misstep to see Apple shares take a significant tumble,” Miles writes.

Full article here.


  1. Critics? Which critics. This is a first. It’s not like they’re abandoning other R&D, that’s for sure. Other tech companies have little to show product wise for the past year, but not apple.

  2. Didn’t they jsut release that OS X.4 will have better handicapable tools, or was it my imagination? (Being “PC” here. LOL) If they are, then how the heck did they place all their efforts in the iPod?

  3. Good Point, Lokiz. Apple hasn’t released a G5 update in awhile, and we keep hearing about the iPod, so all the critics think everyone at Apple is working with the iPod and nothing else it almost seems…

  4. If Apple spent the same marketing money on Macs as they do on iPods, I wonder how much their sales would go up by. The entire Tube network (which I had to use today because my bike is being MOT’d) appears to be covered in iPod posters. All the main routes into London have enormous iPod posters. Prime time TV, iPod ads. I have never seen this amount of advertising for Macs, even when the five-coloured iMacs first came out.

    So I can see how this journalist draws their conclusion that Apple is putting their eggs into an iPod shaped basket.

  5. I don’t believe that the people that work in R&D on the iPod side are the same people working on R&D on the computer side or the OS side or the software side. Different folks with different talents. So it’s not like it is over at Microshit where they have to pull the Long (in the tooth) Horn people away to work on XP Reloaded.

    Yeah, they may be using the same R&D budget, but all sides are making money, so how can that be a bad thing?

    I think some people write these stories just to hear their keys click.

  6. The reason Apple doesn’t spend the marketing money on Macs that they have on iPods is simple. Computers will never be as hip as digital music players. Nor quite as affordable either. While I also believe Apple needs to do a better job in promoting and advertising the Mac platform, it would never have the kind of effect that it does for iPods. $249 for a hip little device you can carry with you and show off to everyone is something that is much more marketable than a home computer system will ever be.

  7. So making a bajillion dollars on the iPod makes for a risk? Where do these stupid ideas come from? I guess if they can’t find something wrong they just make up some BS.

  8. Apple has already lost the war in the operating system arena so they are focusing on the music war. If they can dominate the music download/music player market, they can hopefully sell more desktops and laptops. Apple products work incredibly seamless together. No other company comes close. Their music-centric marketing makes complete sense.

  9. @Dave H: Funny to read that! Germany seems to be no traget market for Apple at all! No Posters, no TV ads, no ads in magazines…I’m really wondering how they are selling products here without any marketing! The consequence is that here in Germany you will rarely find people with an iPod!
    Sad but true!

  10. Hmmm…the last few days have seen a lot more negative press on Apple (with little basis in reality), and the last few days has seen Apple’s stock go down steadily for the first time in over a month. Pretty sad that a bunch of ignorant, opinionated hacks can have that much influence over the value of a company. Did journalism schools just start handing out degrees at the door, or have “news” organizations decided that editors just weren’t a very high priority? A little of both I fear.

  11. oh… now i know that apple stopped working on macs and fired all the mac peeps just to make ipods… and here i was thinking they could do 2 things 😀

    i also thought apple makes a profit on ipods and music… not what i call going out on a limb! a limb is when you take a risk and it hasnt paid you back yet, right?

    but what do i know 😀

  12. I fear these journalist are using a new M$ proofing tool with their word processing. it’s called the Anti-Apple proofing tool.
    Because they (some journalists) cannot relay on their thorough knowledge when it comes to writing, the new M$ proofing tool takes the lead and correct their articles.
    I’m afraid, many don’t even know that Apple makes computers.

  13. atomic mac. Perhaps Jobs is just horrified by the thought of you all putting David Hasselhoff albums into AAC format ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

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