Bright Days Ahead for Apple
The first three months of 2005 have been a special time for Apple Computer. If you dont believe it, look at the companys financial results, which were released Wednesday. Among the highlights: CPU sales were up 43 percent from year-ago numbers and iPod sales increased by 558 percent!
This isnt a column about the iPod, but increasing sales by more than five times (to 5.3 million units) has got to impress. My congratulations to whomever at Apple was able to manage such an increase in manufacturing capacity, parts procurement, and the like.
To find out more about the happy financials, I called my friend Charlie Wolfe, a securities analyst at Needham & Co., who happily disclosed that when Steve Jobs announced iTunes would be ported to Windows, he bought Apple at $6 per share. Its recently been selling for more than $41 per share.
Great investments I missed aside, Wolfe is one of the few analysts I really trust. Hes been around forever, and Ive known him almost as long. We dont always agree, but his net worth has mine beat many times over, so you decide.
Wolfe put it this way: "The company is just kicking ass." But since he gave me 10 minutes of his valuable number-crunching timehe had a report to get outI can provide more detail.
Wolfe predicted that Apples worldwide PC market share, now at 2 percent, will double by 2009. Such an increase would be huge for Apple, but it would create barely a blip on Microsofts radar screen. He said this growth will be driven in part by iPod users, 10 to 15 percent of whom will eventually buy a Mac CPU.
Such growth would translate into a larger marker for third-party Mac software and, with it, the options for business customers. Also, enterprises may find more employees requesting to use a Mac, whether in the office or when working from home.
Fortunately, features in the upcoming Mac OS X "Tiger," due April 29, and an update to Microsofts Office for Mac, due this summer, will make it easier for Macs to play on Windows networks. These connectivity improvements will make it easier for IT staffs to accommodate their users Mac-related requests.
Wolfe was a little dodgy when I asked whether Apples growth now has nowhere to go but down. CPU growth should continue, he said, while music-player growth may slow. Year-to-year growth of 500 percent rarely continues for long.
Nevertheless, Wolfe predicted Apple still has brighter days in its future and its my inclination to agree. My hope is that Apple will leverage its consumer success into growth in business markets, too. But that may require as much a grassroots effortpeople taking Macs to work and using them to work from homeas anything Apple can do directly.
It may seem odd that success with an MP3 player is helping Apple gain CPU share. Such a thing would be unthinkable, I suppose, at any company but Apple. But no company is at the intersection of computing and consumer electronics in the way Apple is today and will likely remain for the foreseeable future.
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