Apple Blows Away Estimates with iPod

People who use Apple computers are usually viewed as pains in the backside by those in thralldom to Microsoft’s Windows OS. Their files won’t open right, their disks are formatted differently, and they tend to be more interested in graphics than spreadsheets. However, Apple has revived its fortunes with the iPod music player, and even Wall Street has taken notice. The question now is whether the company will be able to get consumers who have embraced the iPod to try out the new Mac mini.

Apple just announced its results for its first fiscal quarter which ended on Christmas day (don’t ask why). Net income came it at $295 million, about 70 cents per share, which was almost five times the $63 million, 17 cents a share, in the same period of the previous year. Best of all for shareholders, the most optimistic prediction one could find was around 55 cents a share. As a result, the price went up 13% in after-hours trading. Many stocks don’t return that in a year.

So, the iPod was a big success. The online music service iTunes sold its 100 millionth song in the last year. The product, with its hard drive storage, is technically superior to competitor products relying on flashdisks. And the unit is a rather cool looking piece of hardware. As a result, it’s got about 2/3 of the market locked up. Yet, Apple is still reeling from the decision that founder Steve Jobs made years ago not to license its technology, while Bill Gates of Microsoft did. The result is the ubiquity of Windows, despite bugs, viruses and general instability, rather than Apple and its rather sound operating system.

And so, Mr. Jobs returns to Cupertino, CA, after the annual computer fest in Las Vegas and the Apple shindig in San Francisco, with two new products that represent a strategic pincer movement. First is the iPod shuffle, that will go for $99 and hold around 120 songs (a $149 version will hold a bit more). This is vital to protect the low end of the market from competitors with rival systems. Second, is the Mac mini, which is a $499 Mac, competitive with Dell’s latest offers. The hope is that having been pleased with their iPods, the new customers will try out the Apple system.

To make the price attractive, the mini doesn’t have the peripherals, but new computer users who opt for Apple will buy a regular machine anyway. The mini is aimed right at PC users who already have monitors, printers, keyboards, etc. This lowers the price without sacrificing the contents of the box itself. As one analyst said, Mr. Jobs’ company will have the wind at its back for a few quarters at least, and he means to take advantage of the opportunity this affords him. The temptation to call it a “window” of opportunity is irresistible.

© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.

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