Apple

A lot is happening with Apple right now; the New York Times put it succinctly, “After nearly three decades, Apple is finally being taken seriously not just by the true believers, but by just about everybody.” That ‘just about everybody’ includes IT departments and enterprises, areas where Apple, though far from taking over, is breaking new ground. Meanwhile, Apple continues to sew seeds and reap benefits from its expansion into consumer electronics. iPod sales topped 10.5 million this quarter and sales from its iTunes store counted considerably towards its bottom line. The vote is still out on Apple TV, some call it a dud, others believe that it may even eclipse the iPhone. However, the iPhone is anxiously awaited, and many are saying its impact on the handset could be the same as the iPod’s on digital music. But Apple is not perfect; the release of Apple TV was delayed, and with resources needed for the iPhone, Leopard the company’s latest offering in operating systems, will be delayed as well. While product delays are common in the industry Apple has been able, for the most part, to avoid them; but some are now saying that two in a row may be indicative of deeper troubles.

In a piece on Apple making moves into the IT department Network World notes, “Apple, long a ghost in the corporate-infrastructure mainstream, is beginning to cast a shadow as IT departments discover Mac platforms that are being transformed into realistic alternatives to Windows and Linux.” Apple is being buoyed to its position by a few factors; it’s current stable of products has the company name in lights, there are legions of dedicated users (the Wired blog on Apple is called The Cult of Mac), and the platform may be reaching a tipping point. It could also be the hardware move Apple announced last June, the switch to Intel processors, which is responsible for the new-found acceptance. Network World quotes Van Baker, a Gartner analyst, who sees Intel as one of many factors, “Because of the switch to Intel, success of the Mac OS X, the stability and elegance of the platform, the Mac is a very viable alternative.” However, Apple’s inroads should be kept in perspective, says Baker, “it would require a dramatic shift in the company’s resource allocation to go after the enterprise.” Paul Suh, president of ps Enable, a consulting firm that specializes in systems integration and security for the Mac operating system and Mac OS X Server expresses similar thoughts, “I guess I still don’t see Mac having crossed the awareness gap . . . It has started to seep into IT consciousness, but there is still a lot of prejudice out there, with some saying Mac is not ready for prime time.”

Stating that Apple is not ready for prime time in the enterprise, while probably not what Apple would say, is not necessarily as bad as it may sound. While the company would like to hear that adoption was increasing in the enterprise as well as in the personal computer market (where penetration has been steady at 4 percent for the last several years according to IDC) the company has its eyes elsewhere, at least for now. According to Network World, “Apple isn’t pushing into corporations with a defined desk-top strategy. It does not have a formal division focused on developing software for the enterprise or supporting it.” The truth is the Mac has made its way into the corporate world somewhat on its own, and while Apple most likely wouldn’t mind the prime time spotlight there, it already has center stage elsewhere.
Right now Apple is starring in its own show, the iPhone; and by pushing the iPhone at the expense of the new Leopard OS, Apple is declaring its intentions, consumer electronics first. “Life often presents trade-offs, and in this case we’re sure we’ve made the right ones,” says Apple in regards to the delay. Industry analyst at JupiterResearch, Michael Gartenberg, agrees with Apple, “If it came down to one product or the other slipping, they made the right choice for iPhone to be on time – where consumer demand and anticipation is already running high.” The Xinhua News Agency reports that, “analysts predict it [the iPhone] could be yet another hit product that could boost the company’s growing fortunes.”

Still there is the delayed release of its next OS which some are saying demonstrates the company’s inability to handle its fame. Knight Ridder reports, “The problem Apple is running into is that it’s a relatively small company compared to tech giants such as Hewlett-Packard or IBM.” InformationWeek quotes IDC analyst Richard Shim, “Obviously, they’re not big enough, or experienced enough yet, to properly manage multiple operating systems.” Shim says further, the delay and the reason behind it are, “a risk and a sign of how Apple is changing and diversifying . . . It’s also a sign that they’ll have to be more careful with spreading themselves too thin.”

In its new endeavors even success can be a risk. As InformationWeek puts it, “It remains to be seen whether Apple will be able to keep pace with the growing popularity of its products. If the iPhone is successful, for example, Apple will have to get the additional resources it needs to manage another successful product line.”

A more complete version of this posting, with journal articles, and research reports can be found at the website of Analyst Views Weekly.

More information on this topic can be found in Northern Light’s Software, Computers & Services Market Intelligence Center.

And in the following articles:

Apple Earnings Soar on Sales of Macs, iPods
MarketWatch, April 25, 2007
Apple Inc. said Wednesday that earnings soared 88% in its second fiscal quarter thanks to booming sales of iPods as well as the company’s line of Mac computers. Lower component costs – mostly related to flash memory – also boosted profitability for the quarter. But the company warned investors not to plan on those margins going forward.

In Comments about Apple Chief, Questions of Motive
New York Times, April 25, 2007
When Fred D. Anderson abruptly left Apple’s board last October as questions about the company’s stock options practices grew, a former federal regulator said it looked as if the board “threw Fred under the bus.” Mr. Anderson, the company’s former chief financial officer, neither admitted nor denied wrongdoing in a 2001 options grant that the S.E.C. found to have been fraudulently dated. But he asserted that he had advised Mr. Jobs about the accounting issues and potential consequences and had received assurances in return.

Apple Seen Having Upper Hand in Music Negotiations
Reuters, April 20, 2007
When Apple Inc. sits for contract negotiations with the major record companies over the next month, it will probably seek further concessions from them on selling music without copy-protection software. The owner of the market-leading iPod digital media player and iTunes online music store has already cut an early deal with EMI Group, the third-largest record company, and enters talks with the other labels from a position of strength, according to music industry executives.

Apple’s Leopard-Release Delay a Sign of Growing Pains
InformationWeek, April 13, 2007
Apple’s four-month delay of Leopard is a sign that the computer maker’s resources can’t quite keep up with its ambition of becoming a bigger consumer electronics maker. The company on Thursday delayed shipping the next major release of its Macintosh operating system until October. In dropping the release from the agenda of its Worldwide Developers Conference in early June, Apple said it didn’t have the engineering or quality assurance resources to devote to both Leopard and the iPhone, which is also due in June.

Apple Delays New Version of OS X
Financial Times, April 12, 2007
Apple, the maker of Macintosh computers and iPod personal music players, on Thursday announced that it would delay shipment of its new “Leopard” operating system until October. The company had originally planned to ship the latest version of its OS X operating system in June. But it said it had been forced to push back that date in order to make final preparations for the launch of the iPhone, Apple’s long-awaited mobile handset, which is also scheduled to launch in June.

Apple Stokes a Digital Music Standards War
BusinessWeek Online, April 5, 2007
Using AAC is brilliant for several reasons. First, for Apple, whose stated market aim is to do everything in its power to sell more of its highly profitable iPods (and beginning in June, presumably profitable iPhones), the choice of AAC means more non-Apple devices will be able to play songs purchased on iTunes.

Apple Cult Becoming a Religion
New York Times, March 24, 2007
Apple will not release the iPhone until June, but Leander Kahney, the writer of “The Cult of Mac” blog, posited this week on Wired News that the new phone is already partly responsible for a major change in how the company is perceived. After nearly three decades, Apple is finally being taken seriously not just by the true believers, but by just about everybody.

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