“To some analysts, Apple is so last year. The computer company was the ‘in’ thing in 2004, thanks to the megahit iPod line of music players. But some analysts are wondering whether Apple may be a one-hit wonder. The iPod’s ability to drive Apple’s stock is already fading, and unless the company finds another chart-topper, it could be yesterday’s news,” Troy Wolverton reports for TheStreet.com.
“‘It’s just a different ballgame this year than last year,’ says Shaw Wu, who covers the company for American Technology Research. Wu doesn’t have a position in Apple’s stock, and AmTech does not do investment banking. Apple continues to post strong iPod sales, of course, and is the leading vendor of digital music devices. But Wu and other analysts see signs of trouble,” Wolverton reports.
Full article here.
MacDailyNews Take: Just because some analysts see signs of trouble doesn’t mean there’s trouble. Some analysts seem as if wouldn’t be able to analyze their way out of a wet paper bag. Read the full article to find out how some are searching hard for any negatives to grab onto, even going so far as to dredge up the G4 Cube and wrongly comparing the iPod to the Mac’s history. It’s funny how wrong some people can be when they misunderstand lessons of the past and don’t clearly realize what’s really happening today.
The Macintosh platform required and still requires huge investments by developers to create compatible software. So, when faced with budgetary contraints, developers chose and still sometimes choose to go with the most popular platforms. The iPod simply plays music that can be encoded, for very little cost, in any format the “developers” (musicians and labels) desire: AAC, MP3, WMA, etc. The music doesn’t need to be rewritten, recorded, and remastered. It’s like writing Photoshop once and then pressing a button to translate it for use on Mac, Windows, Linux, etc. Any analyst who draws an analogy between Mac OS licensing and the iPod/iTunes symbiotic relationship is simply highlighting their ignorance of the vast differences between the two business situations.
“Of course it is, because it’s not praising Apple. Afterall, Apple can do no wrong.”
Why would you imply Apple can do no wrong? No one is perfect.
They make all the right decisions, they are never wrong and the rest of the world hasn’t got a clue.”
As far as Apple is concerned, typically the world doesn’t have a clue.
——-
Overall growth rate. 70% down from 74% in previous quarter. Duh! They’re coming off of a holiday quarter, that usually happens. As far as future growth rates going down to 15%: anyone who thinks that any company can sustain that high a growth rate indefinitely is an idiot.
Competition: That remains to be seen. On thing is certain. Creative had flat sales going from Q4 to Q1 (calendar not fiscal) for the Zen products. Apple on the other hand had growth in the same time frame.
Napster and Real: Let’s wait six months or so before we declare anything. So far, nothing. Who knows, Apple could announce a subscription service tomorrow. Then where will Napster and Real be?
Apple’s history? Refer to the MDN take.
Stock growth: 12% this year, 200% last year. Does anyone with a half-working brain think a company can have a 200% stock increase two years in a row?
Halo effect? About two weeks ago, analysts were praising proof of the iPod Halo effect, now, they question it. Talk about Bipolar!
“Even if the company does see a sustainable halo effect from the iPod, Apple still will likely need to come out with another hit product soon, say analysts, who point to video device or a wireless-enabled iPod as the company’s next effort. Regardless, Apple needs a new device and needs it to be a success, because some investors and analysts are already building projected sales from the next product into their estimates, notes Wu.”
This why analysts remain disappointed. They predict iPod sales and include demand from a NON-existing product. That’s like trying to predict how many systems Dell will sell this quarter based off of Longhorn demand.
“Still, even under Jobs, the company has had some missteps along the way. The G4 cube, for instance, sold poorly. And the company’s sales slumped as it transitioned to its Mac OS X operating system.”
To things here: the G4 Cube primarily failed due to its high comparative price (you could buy a slightly slower, much more expandable Power Mac for $100 less).
CPU sales during the transition to Mac OS X can be (at least partially) attributed to the economic downturn. They happened at the same time – not exactly a great time to roll out your latest and greatest. Then again, that’s why Steve said at every possible time “we’re going to invest our way out of this downturn.” This is going to continue to pay off in spades.
As far as the last three paragraphs of the article: every major corporate move is a risk. It’s up to the executive team to plan and execute as best they know how in order to get the most out of it. Apple’s entrance to this market with the iPod was a great start. If and when they follow up with something (totally) new, they will have the experience, foothold, mindshare and market presence on their side.
Anyone with their eyes open can see Apple can make a product that not only looks great but ‘just works’ (iPod). When Apple is ready, I’m confident that they’ll do it again.
To: ClockSpeedRealist
Don’t worry, neither Intel or AMD have launched a 4 GHz processor. Intel cut out of their roadmap to focus on dual-core chips.
Its no big deal that Apple is down from its high water mark on the stock market, truthfully the stock was overvalued. Now it is closer to its real value. Apple will have a good time in 2005. All of us mac users have lots to look forward. Hopefully IBM and Freescale can get past the difficulties with the chips. Apple still has some software cards up its sleeves. With all the other accessories brought out like the airport express theyve had some great success. It would make sense for Apple to try some new waters with a home media server with a MONSTER hard drive.
OK, this may be just a tad off-topic, but I have a suggestion for Apple’s next killer Powermac. How about a top-end Mac that supports two users? They been doing that for years, huh? No, not this way… they already have graphic cards in all the PMs that will drive 2 screens, so just hook up a second keyboard and mouse, and let two people go at it AT THE SAME TIME. Charge a little more for the OS that allows this maybe, but think of how many people (especially businesses) that would find this a very attractive price-per-seat system. I’d think the increased sales of the 2-seater would offset the lower number of people buying 2 macs. And if these Macs had dual dualcore-G5s……
The “anal-ysts” Shaw Wu is so last quarter because the result is already out this quarter!!! Find some other way to “Wu” the investors, Wu!!
Trouble:
“Maybe you should stop yawning and pay attention when you read.
CaptnKirk said “Besides a BIG jump in processor speed”
I also read the Captn’s statements as meaning “what other things besides a big proc speed increase would you like to see.” We all know the bump was only 200 MHz.
That doesn’t refute your central point, which I agree with – the top end of the pro stuff should be bleeding edge. So that is a problem.
I hope that the resources that went into the Mac Mini sapped a little attention from the pro division.
However, regarding what was said in the actual article, there are surely signs that Apple isn’t going to keep up the rapid growth in iPod sales, but iTMS is still gaining steam and that isn’t addressed, except to talk about Napster, etc. However, we all know there is a pretty good split in rent v own for music – I’m not sure that Napster & Rhapsody customer base is really going to be from the iTMS “own” people. However, that’s merely conjecture.
I emailed the author a couple of questions in regards to the article and here is his response:
“Thanks for your note and questions. I’ll answer them in reverse order:
2) American Technology Research does not do investment banking and they
bar their analysts from holding positions in any stocks that they either
cover or are in the same sector as the companies they cover. In other
words, Wu is barred from holding not only Apple, but any of Apple’s
competitors, even if he doesn’t cover them.
1) Apple’s year-over-year growth rate on iPod was certainly impressive in
the quarter. But this is a young, ostensibly growing business. Fast
growing businesses usually do not see sales declines sequentially.
Seasonality–where some quarters are traditionally stronger than
others–usually only starts to crop up as a business matures.
Additionally, the sequential decline was noteworthy because it highlighted
the impact of the iPod shuffle. While Apple’s unit sales grew from the
first to the second quarter, its revenues from those sales dropped. That’s
likely due to the shuffle and may well indicate that the bargain player is
cannibalizing sales of Apple’s pricier–and more profitable–iPods.
I recognize that Apple posted better than expected earnings and revenues
in its just-completed quarter. But the stock sold off in the wake of the
report and a number of investors and analysts I talked to pointed to the
sequential decline in iPod sales as the reason why.
Troy”
Wingsy,
You know, in my neck of the Canadian woods, before we all got indoor plumbing, the 3 seater shit house was a real big seller.
I think you may have something there. Nothing brought a family together like the 3 seater shit house. A multi user computer could do the same.
the music phone (not from apple) will be the thing that stops ipod growth.
the mini seems to already lost its sizzle. mini sales are hurting emac and imac sales.
apple can´t make a decent ad to sell computers. most of its ad budget is allocated to the apple stores.
power macs sales have wilted – no great, fantastic leaps and bounds in processing speed there.
apple can´t compete in the computer game market.
steve jobs is one totally paranoid, arrogant dude.
….reasons to be concerned about apple.
http://www.anandtech.com/displays/showdoc.aspx?i=2400&p=11
comparison between dell and apple 20inch monitors.
both use the same screen LG.Philips LCD (literally, it’s part# LM201W01)….the apple costs twice as much.
guess who wins?
The firm was founded by a group of professionals who worked together for years at an established technology research boutique. We intend to build on that experience to provide great service and insight to help our clients navigate the technology investment landscape.
Sounds like a bunch of has-beens…
Our research product is differentiated because our research analysts have comprehensive backgrounds in industry, sell-side and buy-side to understand how to thoroughly evaluate the relevance of information and the market impact of news and chatter. We have an “information network” of industry and our own financial experts to check assumptions, trends and technical issues to ensure that our calls are well-founded.
…fired long ago for uninspiring bullshit.
worked together for years at an established technology research boutique:
We’ve downsized from a boutique to a market stall [website].
sell-side and buy-side:
We’ve traded before but we seem to only be able to make money from selling advice — not trading.
“information network”:
Hey, the internet works again now that we’ve dumped Exploder for Firefox.
our own financial experts to check … technical issues:
A recipe for disaster.
Apple will release the most advanced PC operating system available on Friday. This OS will only get better.
By all accounts, no machine capable of running Panther is being obsoleted.
By all accounts, this OS will make all existing hardware it runs on, run faster.
Dual 2.7GHz G5s with dual 1.35 GHz main busses. True 64-bit archecture.
Yeah. Apple’s in a world of hurt.
Confusing.. I read that a http://www.anandtech.com/displays/showdoc.aspx?i=2400&p=11 article and then…
I went to Dell´s Finnish store and checked the price for the Dell´s Ultrasharp 2005FPW 20″ widescreen and the price for that with VAT 22% is 840,58€
Then I checked Apple 20″ Cinema´s price again with VAT 22% and it was 838,99€….
So the Apple is CHEAPER! (Better looking and better in avarage)
Ok only with few €uros, but still. Can anyone explain this?
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Where is the Apple premium that everybody is talking about???
And one more thing!
Dell does not have comparable 23″ or 30″ widescreen monitors at all!
Finland guy -the prices for the monitor article are for the US.
Just because the locals are ripping you off is a local problem.
Dell Germany price is 559 Euro including tax.
Apple Germany price is 789 Euro including tax.
Moral: Don´t shop in Finland…
On more thing Finland guy – In the us you could buy two 20″ for the price of one Apple 20″.
Then you would have 40″ of monitor space-more than the Apple 30″ at a fraction of the price….
all i see is that apple is graduatly lowering its prices… weeee
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hd you must be one patient person…