Here’s the deal, though I’ve not had the personal confidence to follow it: Apple’s stock continues to be primed for future growth regardless of iPods or any new product releases. Don’t sell it yet, no matter how high it gets.
No one is talking about computers anymore; with all the iPods, iTunes, iTunes Store, TV, and iPhone discussion; but Apple is still making them and selling more than ever-to the tune of 1.6 million last quarter. The PC market has matured quickly and dramatically over the past two decades, but that growth has stabilized notably in recent years, to the point that a PC has become a commodity. A functionally identical Windows machine has become the end product of every PC vendor, leaving price and support as the only possible fronts to differentiate and compete on. The price wars have hit bottom, and there is no where left to grow in that direction. Witness Dell’s inability to maintain growth and the reinstatement of Michael Dell as Chairman to turn them back around. Sorry to Michael, but this is not a game that you can win. Unfortunately for everyone, the two battlefronts of price and support are mutually exclusive and your HPs and Dells cannot go both ways. Support is expensive and cost-cutting hates expense. The best any Windows vendor can hope for from their PC business is to follow and maybe slightly outpace the industry growth average. In publicly held businesses, growth is king. Game Over.
Queue the exception to this bleak scenario: Apple has recently shown that it can outpace the industry growth average. Last quarter their computers sold 28% more than the year-ago quarter while the industry grew at just 9%. Why is this? Apple has done a good job of staying competitive on price for comparable hardware, while not pursuing the low end of the market at all in terms of low price or low performance. Which is nice, but they have clearly chosen to pursue support as a key differentiator more than price. And they’re not bad at it either, having convincingly won all Consumer Reports awards for tech support and customer satisfaction for half a dozen years running.
But the real magic is the Mac itself, which is just designed better and sports an entirely different Operating System and suite of software than that of any other PC maker.This leaves Apple in the enviable, but not accidental, position of being the only manufacturer capable of delivering a differentiated product in an otherwise commodity market. This will allow their sales to grow. This means money, if you own stock. Plus they invented the friggin iPod, have you heard of it?