“Apple’s stock is soaring and its revenue is booming. The computer maker has a hit product and is getting loads of favorable press. So what’s wrong with this picture? Nothing, if you ask investors who have enjoyed a run-up of 24% in the stock this year after a 200% surge in 2004,” Troy Wolverton writes for TheStreet.com. “But more-skeptical observers might note that Apple’s been here before. And even some of those bullish on Apple’s future admit to some doubts about whether the company can maintain its momentum.”
“‘That’s the million-dollar question,’ said Tim Deal, an analyst with Technology Business Research. ‘When you’re dealing with a consumer-focused company like Apple, it’s very difficult to anticipate the consumer wind. Consumer interests sometimes have no rhyme or reason,'” Wolverton writes. “The keys for Apple, analysts say, are to keep up with demand for its hot products and to continue its innovative products. The first requirement is a problem that has frequently plagued the company, said Gene Munster, an analyst with Piper Jaffray.”
Wolverton writes, “Right now, of course, everything appears to be clicking with the iPod. In its fiscal first quarter for instance, Apple shipped 4.58 million of the devices, up from just 733,000 a year earlier. Thanks to that kind of growth rate, the company claims that it now has some 65% of the market for digital music players, up from 31% a year ago. Meanwhile, the company has seen a pickup in sales of its bread and butter: the Macintosh computer line. Revenue from Mac sales increased 26% in the recently completed quarter, a rate about double that of the PC industry as a whole. And Apple is clearly not standing still. At the MacWorld conference in San Francisco last month, the company rolled out two new cut-price products: an iPod Shuffle and the Mac mini, a bargain-priced computer.”
“Early indications are that both products, which are targeted at the low end of both markets, will be successes. Not only does Apple have a backlog of orders for the iPod Shuffle and the Mac mini on its Web site, but a recent Wall Street report found that the company’s U.S. stores were all but sold out of both products,” Wolverton writes.
Full article here.
MacDailyNews Take: Hopefully for Apple, somewhere right now factories are churning out iPod shuffles and Mac minis by the boatload.
One concern I have as an Apple fan and shareholder is what will happen when iPod sales fail to meet expectations for the first time. Will it generate more doomsday press like we’ve seen in the past? I suppose it all depends on what else they have going on at the time really. It’ll be interesting for sure.
Apple has been doing a better job in the past 6 months with supply. I was able to get an iPod shuffle and a friend was able to already find a Mac mini. Granted, there are always going to be delays for some when a new and very popular product is released, but it’s not as bad as it has been in the past for Apple. Hell, you couldn’t even find an iPod mini for a good 6 months last year, it’s absolutely not going to be like that with the shuffle or the Mac mini.
actually, there’s been so much negative, ill informed press since the iPod became a hit that I think the current price is not over-inflated. unlike other Wall Street darlings, Apple continues to be plagued by articles recalling how they lost market share 20 years ago, how Jobs screwed up as a control-freak, how the iPod is going to be killed by the next Korean player that I think the current price will remain stable. just compare the press to Google’s IPO and you’ll see that Google is much more likely to be overprice and thus prone to a crash.
By staying a bit behind in supply, Apple is accurately able to guage demand. One of the reasons they remain profitable is extremely tight inventory control. How many companies out there can you watch the number of products on the shelf or in the channel to tell when something new is coming. I think they do a very good job.
As frustrating as it is, it’s better that Apple keeps inventory tight rather than having a huge stock of products that then have to go on “fire sale” which reduces margin, desirability and brand equity.
Wouldn’t it be nice if the press focused for awhile on just the fact that Apple products were popular; not even spend time lamenting that they are so popular that the demand outstrips supply.
Oh well…back to reality.
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Go, Apple!
Can M$ maintain its momentum? Can Gaveway or Dull do the same? It is very easy for skeptic and critics alike to raise their issue in writing an article. All it takes is a couple of hours. After that, they get paid and wait for Internet hits. On the other hand, for a CEO to turn a company around, it takes courage, insight, forth sight, vision, charisma, leadership and years of effort to accomplish that, as in Apple ‘s case. If anyone follows the recent history of Apple, its success is not overnight. The longer it takes for a company to succeed, the more secure the company’s future is. It took Steve Jobs more than five years to get to this point and I think Apple will have many more years of prosperity. I tend to ignore this type of crap writing all together as they tend to be shallow. Talk is cheap.
TB2 makes a great point. Certainly, at some point, iPod sales will decline (if for no other reason that EVERY SINGLE PERSON ON THE PLANET HAS ONE!). For Apple to maintain their current prosperity, they’ll either need to introduce the “next iPod”, ie. a totally new product, completely unrelated to the iPod that is platform independent, and everyone will see as a must have item. Or, they’ll need to have the current momentum drive the Mac marketshare so that there is a renewed interest in the Mac platform from a large number of switchers.
Honestly, both could happen. The Mac marketshare started to grow before the mini was even introduced, and the mini should do amazing things there. And as for creating the “next iPod”, with Apple’s innovation and talent, they have the best chance of anyone in my book.
I think that the iPod will probably reach it’s peak in the next year or so. However, this is where the beauty of FairPlay comes in. The millions of iPod owners have been buying their music from iTMS, so when it comes time to replace their current iPod, are they going to buy a competitor’s product and have to go through great pains to convert their iTMS-bought songs to something that the iRiver can play, or are they just going to buy another iPod (this argument doesn’t even take into account which is the better product)? I’m betting they go with the iPod again. THAT’S why Apple won’t license FairPlay. In other circumstances (like if MS did something like this) I’d say that it’s wrong to lock customers in this way. But Apple is in a position that MS has never found themselves in – they’re actually offering the best solution on all fronts, so I have no problem with it.
i think ipod sales in the us might reach a peak next year, but don’t forget the global market. i don’t believe europe and asia are nearly as saturated as the us market ipod-wise. because of the iconic status of the ipod, apple gets free exposure through the media in some far flung places.
my own personal belief is that the mac mini is the start of something huge. in a couple of revisions, it could become the MUST HAVE digital entertainment hub. all apple needs is a few more ports(audio in, for example) and some nice pvr software and the mac mini can take over the living room. it would pick up where the ipod leaves off, in a sense.
It certainly does seem that a lot of writers are rooting for Apple to stumble. Oh well, I guess that would be more exciting and “newsworthy” than,- Apple does great, Apple continues to do great, Apple does great again, Apple is doing incredibly well, Apple sells even more, Apple does great. Apple…
As far as the supply thing goes, the times where Apple has had troubles in the past are when they have innovated past the ability of suppliers to keep up with production of a cutting edge component (mini hard drives, G5 chips, etc). THIS time everything in the Mac mini and the shuffle have been around for a looonnng time. It has just been put together in a new way. So I don’t anticipate them having nearly as many problems with supply as they have had for other new innovative products.
MDN, your magic word thingy is acting wacky, two input boxes showing and it is popping up a new window everytime I try and post. You should check it.
TB2.. you’ve gotta have a realistic valuation in your mind.. cuz there IS gonna be a stock overshoot.. and when you feel the stock has gone past your valuation you sell it..
that’s not necessarily a bad thing is it?
Do you think they meant to write “it’s very difficult to anticipate the consumer *mind*” rather than wind? I’d hate to work in an industry that relied on sniffing the consumer wind… See people, there are worse jobs out there than yours!!!
Since the dawn of time theres always been alot of interest in Apple product line. Unfortunatley, I know people that have been turned off or cancelled orders because of the ‘unavailability’ of any given product. Hell, I waited 4 months for my dual 2.5G5, had it 2 days and the logic board fried.
Should I need to wait that long? No.
Should Apple stop announcing products until stock is actually available for immediate purchase?. It might help.