“Rest easy, ye merry investors in Apple Computer. Even after a three-year run that has sent Apple shares heavenward, some bulls believe the company — and its stock — can only climb higher in 2006,” Troy Wolverton reports for TheStreet.com. “Apple shares have more than doubled in price this year and have risen more than 10 times since their nadir back in 2002.
“So, what’s the next product splash to spark the stock’s run to $100? Depending on whom you ask, the answer is anything from an Apple-branded cell phone to an Apple-flavored take on Microsoft’s Media Center PC concept to simply more iterations on the iPod line,” Wolverton reports. “A step into consumers’ living rooms would seem to be a natural one for Apple, given its dominance of the digital music market, its introduction of downloadable video content and the multimedia features of its computers. The company already made a move in that direction earlier this year, introducing a program called Front Row that allows new iMac users to remotely control the songs or videos playing on their computers. The bet among analysts is that Apple will expand on that plan in 2006, coming out with a device that better links consumers’ existing entertainment systems with their digital content. That’s been the ambition of the Media Center PCs, but those have seen tepid sales to date.”
“For bulls, the move portends good things for Apple in the PC market. Consumers are increasingly looking to buy laptops instead of desktop computers. While Apple’s laptops have long been praised for their design, they increasingly have been seen as underpowered, thanks to the long delay by Apple’s PowerPC suppliers in developing a low-powered version of the high-end G5 processor,” Wolverton reports. “Once Apple makes the switch to Intel, the company’s laptops no longer should be at a speed disadvantage to competitors, analysts note. Intel has a robust line of notebook chips, which are the industry’s standard… Despite the obstacles on the notebook side, Apple’s worldwide share of the PC market has risen from roughly 2% in 2004 to about 2.4% through the first three quarters of 2005. Some bulls think that market share will rise to as much as 10% in coming years, thanks not only to the Intel chips, but by using the iPod to attract new Macintosh customers — the so-called halo effect. ‘The halo effect is definitely here,’ says a portfolio manager at a major financial services firm who is long Apple.”
“But beyond new products, fans of Apple’s stock make the case that the company can continue to outperform the market by simply doing what it has been doing. IDC projects that the worldwide market for digital music players will grow to 106 million units next year. Meanwhile, Apple estimates that it has about 75% of the U.S. market for digital music devices,” Wolverton reports. “Assuming that it can maintain that dominance and extend it worldwide next year, Apple would sell 75 million to 80 million iPods next year… Pip Coburn, CEO of Coburn Ventures, believes that people are overlooking the growth of Apple’s retail store base. The company now has some 130 stores, up from just 65 at the end of fiscal 2003… Given that Best Buy, for instance, has more than 700 stores and Gateway had hundreds of retail outlets at its peak, Coburn believes Apple can easily hit 300 stores over the next three years, helping ratchet up sales and earnings… Jim Grossman, a portfolio manager at Thrivent who is long Apple, feel that with this company — and stock — you’ve just got to believe. ‘At times, you’ve got to abandon traditional financial metrics and, for lack of better terms, drink the Kool-Aid,’ he says.”
Full article with much more – a good read – here.
Apple has plenty of room for massive growth in the personal computer and CE markets. You almost don’t have to just believe or drink the Kool-Aid. You just have to look at the pieces Apple has in place on the board today and think about the chances of competitors outdoing the iPod or Mac OS X in 2006.
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Don’t be left behind…too many pluses on Apple’s plate to not see some big growth ahead.
2006
1. Year of iPod (again)
2. Year of laptop (this is big)
3. Year of itunes expansion
3. Year of living room (maybe)
4. Year of many more Apple Stores
5. ..and mabe a new Tiger in there by years end.
I don’t think the bulls did drink the Kool-Aid. I think they finally looked at the facts and reported them.
Also, it helps when you don’t have morons like Enderle writing anything.
Kool-aid anyone!
I am really happy with AAPL (bought it when it was down to $13.50).
I do wait it to climp over $150 and split and go up again to $150.
I am really happy indeed. The market share will go over 10% soon.
“an Apple-flavored take on Microsoft’s Media Center PC”
Apple doesnt do ‘takes’ on other people’s products. Particularly MicroSnot’s. If and when Apple gets further into a media connection for the Mac, it will actually work.
I swear this Wolverton geek hasn’t got a clue.
Many, many “experts” and “pundits” have spelled gloom and doom over the years, a few of them tolled a death nell for Apple.
Guess what? Apple is still alive and strong, the future looking very bright indeed for my favorite fruit company. And 2006 looks very bright for Apple.
New products and Apple’s partnership with Intel will usher in greater market share.
I look for Apple to start an aggressive media blitz for its computers when the Intel chip change gets underway.
Hm. Sometimes I wonder about the Kool-Aid symbolism and how much it really applies when it comes to Apple? To me, it would be more fitting to say that users of Microsoft-products have gulped down barrels of Kool-Aid, especially if they seriously claim that everything is as it should be and normal!
Just a digression…
And you said…?
Another factor which may contribute to the continued growth of Apple’s fortunes is the realization that M$ hasn’t an operating system that will meet expectations whereas Apple does. It other words, Vista will be a susceptible to the same problems as previous systems. So why buy junk? There comes a time when people finally get the message on global scale that M$ operating systems are not worth the hassle.
I agree about the Kool-Aid metaphor, it doesn’t work. Jim Jones’ Kool-Aid closed your eyes permanently, while Steve’s Kool-Aid opens them.
“Bulls drink the Kool-Aid”
And that’s going to be way too much sugar for an adult male bovine mammal. Unless you’re going to make Rob Enderle the matador.
I think the Kool-Aid metaphor is misplaced. First of all, “drinking the Kool-Aid” constitutes images of Rev. Jim Jones getting his devout followers to die long painful death for the sake of their beliefs.
Now with that in mind, I believe those who drank the Kool-Aid are the early adopters, the Mac evangelists and loyalists who were there buying up Apple products before the days of the iPod, iMac, and PowerMacs. The ones who insisted that NuBus was a viable standard, ADB ports were only for Apple mice and keyboards, and that Firewire would always be a better means of transferring data than USB. They bought the expensive products and software that allowed Apple to stay afloat long enough before they had a huge hit with the iPod that was compatible for the Windows platform – NOT the original 5GB iPod.
They were the guinea pigs, the zealots, the protectors of the cause. They are now a dying breed because of the Kool-Aid.
Do not underestimate the strategic value of winning in the living room. If Apple can do it right and win — and I believe they can and will — then they can, with iTunes building lock on the music business, lock up control of the consumer electronics market. No, they won’t make all of the pieces, but they will steer the direction of home entertainment and flourish in that ecosystem.
It must be raining chairs in MicroSoft’s boardroom.
Disclosure: I am an Apple investor.
Dimplemonkey,
you’re right of course, but life’s like that; now everybody’s jumping on the bandwagon and the Apple ‘hardliners’ who helped Apple through the lean years wont get any credit – not even from Apple.
C’est la vie!
P.S. As a somewhat naive and elderly Englishman, I’d like to know where the term ‘Kool-Aid’ originally comes from.
Actaully we haven’t made kool aid for some time. We’ve been making gatorade to try to pump up the performance!
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Well done MDN. Another mistake exposed by your readers… I agree 100% with the posts above that kool-aid and Apple does not work any more… Cool-aid is for Microsoft Windows – it keeps its users blinkered to reality.
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