Washington Post: Apple’s iTunes Music Store, iPods help boost stock, but how long will it last?

“For years, owning Apple Computer Inc. stock was like owning an Apple computer — a vote of confidence in a company that sometimes seemed as if it would be crushed any day by larger competitors, chiefly Microsoft Corp.,” Mike Musgrove writes for The Washington Post.

“But, despite some close calls over the years, Apple has survived and thrived — and so, lately, has its share price. As many tech stocks marched upward this year, Apple’s share price has been growing even faster than tech bellwethers such as Dell Inc. and Intel Corp. On April 8, 2003, for example, the stock closed at $14.45 a share. Recently, Apple shares cracked the $28 mark,” Musgrove writes.

“While Apple’s rising share price rests on its impressive success in the digital music world — with its best-selling iPod digital music player and its popular online music store — even longtime observers of the company are surprised by the stock’s extended rally,” Musgrove writes. “Futurist Paul Saffo, a director at the Silicon Valley think tank Institute for the Future, said Apple’s stock is ‘like Disney stock used to be’: People buy it for sentimental reasons more than economic reasons. People tend to grow attached to their PowerBooks or iPods and end up wanting to own a piece of the company.”

“Like many Apple watchers, Saffo credited the savvy business moves of Apple’s charismatic chief executive Steve Jobs for much of the stock’s recent value,” Musgrove writes. “If Jobs were to leave the company tomorrow, he said, ‘people would rush to sell their shares. The iPod’s really cool, but it’s not a long-term thing,’ he said. ‘Apple has to be asking itself what’s next. What’s the next equivalent of the iPod?'”

“In a recent report, Merrill Lynch & Co. analyst Steven M. Milunovich figured that the iPod and online music business will be worth almost $1 billion to Apple this year. ‘We’re . . . optimistic in believing that iPod is not just a one-hit wonder that will be knocked off,’ Milunovich wrote. Several would-be competitors to Apple are trying to dream up an ‘iPod killer,’ but none has matched the company’s success. Microsoft, for instance, has been tinkering with software for products that play music and movies without generating nearly as much buzz,” Musgrove writes.

“Hewlett-Packard Co. this year scrapped plans to develop a digital music player and announced plans to license the iPod. Dell’s slightly cheaper portable music player hasn’t caught on and rival online music services such as the new version of Napster haven’t been much competition to Apple’s online music store,” Musgrove writes.

Full article here.

17 Comments

  1. Analysts have gone from saying that Apple is going out of business to wondering why they are not going out of business.

    It seems like they are waiting for a flop – for some Apple product to fail, so that they can say “Told you so”.

    Meanwhile, ‘bellwethers’ like Intel or Microsoft can plod along with mediocre products with little to no bad press.

  2. MS are so successful because they bundle all their applications onto everyone else’s hardware and where necessary they give apps away for free just to gain market share. They are also great at marketing, promoting and PR spin doctoring. That is why they are where they are.

    Apple may have had some flops in its time and made some bad decisions in the past however they also have the ability to innovate and create/develop products with new identities that every body wants. This ability is what separates them from the competitors and allows them to continue and prosper.

    If Apple didnt create and innovate they would have died long ago and of course if MS didnt bundle their apps they never would have gotten started.

    Cheers Winmacguy

  3. I get tired of reading the same crap. Apple is going to fail … someday. Well no kidding! Tell me when has a company that’s been in business for close to 30 years never failed? Will Apple stock go down maybe but why do these Tech-Analysts get a thorn in their ass about Apple?
    I wish these Tech-Analysts would just stop with the hope this article kills the Apple momentum and turn to a issue that is costing Corporate America billions of dollars a year … the lack of security in Microsoft Windows.

  4. “Analysts have gone from saying that Apple is going out of business to wondering why they are not going out of business.”

    That’s because they don’t understand where Apple is coming from and where its strengths are. Companies like Dell, HP, and MS make products that give customers what they ask for. Usually that means rock bottom prices and software that works just like what they are used to. Apple makes products that are not what people ask for, but that people don’t know they want until they see it. Everything they have been making is undeniably cool, yet none of it is what people have asked for. The problem is that since they are things people don’t know they want until they see them, they need to see them, and they don’t. They see the hardware, and while looking cool, it also looks expensive. Looking cool is rarely enough to make someone spend that much extra money. The part they don’t see is what would make them spend the money…OS X. It’s not what they asked for, which is Windows, but it’s something that when they see it they want it more than what they asked for. Only they don’t see it. As far as I can tell, Apples biggest mistake at this point is not advertising OS X.

  5. From Plush
    “The part they don’t see is what would make them spend the money…OS X. It’s not what they asked for, which is Windows, but it’s something that when they see it they want it more than what they asked for. Only they don’t see it. As far as I can tell, Apples biggest mistake at this point is not advertising OS X.”

    Agreed!

  6. “Analysts have gone from saying that Apple is going out of business to wondering why they are not going out of business.”

    This one sentence is a slam against those who have published their biased and ignorant opinion rather than do the hard work of discovering how Apple is profitable and remains in business. Apple has made mistakes, but what company hasn�t? In spite of certain errors of omission and commission Apple is still a leader in design and innovation.

  7. Hopefully will last till Xserve G5s will make inte businesses and other Virginia Tech clusters will come around. So far – and for what I know – at least 4 major institutions in the US are looking closely at that.

    Time (and maybe next Windows virus waves) will tell whether consumer and business are ripe.

  8. “‘Apple has to be asking itself what’s next. What’s the next equivalent of the iPod?'”

    This is a very true statement. The Apple is asking this question, the analyst are asking this question, and from reading MDN so are the Apple loyalist. I have read so much speculation, on MDN alone, about the “next” cool Apple product that you can’t help but agree with the analyst’s statement.

  9. Apple is a computer company. It has to marketedly increase computer sales if it wants to survive.
    Or take on a new strategy of licensing its System software to other hardware makers….

  10. Business success is based on two factors: Opportunity and being ready when opportunity arrives; “Find a need and fill it.”

    Apple is building a rock-solid foundation for an entirely new computing platform (getting ready) for the moment when MS crumbles under it’s own shortsighted weight (opportunity). To throw millions of dollars into advertising now would have very little effect. Apple is waiting for the moment when people are tired and fed up, and companies are wasting their billions on a decaying system.

    If ANY of us had the insight that the Apple staff does, we’d have our own innovative company. There is no doubt that Apple has similar highly innovative strategies for its advertising. All of this talk on here about what Apple should do, based on conventional tactics and old Business 101 textbooks from your Community College days, are laughable. Now you know why you don’t have your own advertising company or why you are not on Apples board of directors.

  11. European music fans not ready for online stores, says Real chief
    [MacUser]

    The chief executive of Real Networks has claimed that online music stores are not yet viable in Europe, because potential customers are too used to downloading songs for free.

    Who is this Idiot! Are we Really surrounded by Real Windows Idiots?
    We need a new legistlation that Windows users are not allowed to get children.

  12. Plush’s hammer hit the direct center of the nail today. Take some of the 5 billion in cash, show several 30-second slot commercial of the elegance and features of Panther, then zoom out to see it running on different Mac hardware. KISS principle. Just show what you got…Chiat Day thinks so complicated. No personalities or scenarios, just show people the goods. Ugh!!!

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