Dell and Creative: Challenged by the iPod?
For Creatives Sim Wong Hoo, the
Some analysts have already cautioned that both men might be mistaken about the impact that the iPod and Mac mini might have on the industry. In a posting on his blog, Jupiter Research analyst Michael Gartenberg called Wong Hoos comments "foolish." "Creative doesnt get it and is going to dismiss Apple to their own peril. You can see why [its] going to get beat up in this market pretty bad."
Gartenbergs colleague Joe Wilcox described the Mac mini as "a potential suitor to Windows users, particularly those who have iPods and enjoy the experience delivered by Apple."
Wilcox goes on to caution that hopes of massive growth in Mac userssomething that Mac aficionados would love to seecould be premature. "Apple could gain a few points of share but doubtfully denting Windows PC market share in any immediate significant way," he claimed, adding that distribution might prove to be the Mac minis Achilles heel.
Of the two CEOs, it would appear that Creatives has the most reason to be scared of the potential success of the iPod. After all, Creative is No. 2 to Apple in the hard drive-based music player market, and the entry of the company into the cheaper flash-based arena could mean Creative is displaced from its premier position there. Should the iPod shuffle prove to be a successand
For Dells Rollins, the threat from Apple is less pressing, but certainly something that the company will be aware of. Apples strategy to exploit the success of the iPod in the wider computer market is an interesting one, which almost reverses the traditional relationship between the peripheral (in this case, the iPod) and the computer (a Mac). Where companies like Dell have long sold or bundled peripherals when a customer wants to buy a computer, the Mac mini acts as an invitation for those buying a peripheralthe iPodto get a computer to go along with it. After all, this is a peripheral that, in its most expensive form (the $599 60GB iPod photo) costs more than a Mac mini.
What will worry the other PC companies is that, in a market where everyone except Dell has struggled to make money, Apple has long been highly profitable with only a 2 percent to 3 percent market share. Should the company boost this to 4 or even 5 percent, its profitsand thus its ability to increase its spending on marketing and developmentwould also be significantly increased, raising the prospect of the company simply being able to blow away its less profitable rivals.
Such a revitalized Apple could, over the long term, become a challenger to even the 17 percent of the worldwide market that is currently owned by Dell. While Rollins may be right to dismiss Apple in the short term, you can bet that hell be keeping a sharp eye on how well the Mac mini is doing.
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