Thursday, March 24, 2005

Apple Butter On the Toast

There was an article, "Is Microsot toast?," in today's online Financial Times. The articles says a lot of good things about Apple, but as always you have to look at what isn't said to get the real skinny on Apple.
Over the two year period commencing March 18, 2003, Microsoft shares rose 5.3 per cent; Apple’s 373 per cent; and the Nasdaq Index, 43.4 per cent (bouncing back from historic lows). The upshot: while Microsoft’s market cap has flat-lined at $260bn, Apple has jumped from $6bn to $35bn. Of course, the spectacularly popular iPod music box has generated much of the buzz – underscoring Apple’s multi-pronged assault on the Microsoft Monopoly.
I give Apple full credit for developing and being successful with the iPod. Just don't get carried away and think that Apple is doing a "multi-pronged assault on the Microsoft Monopoly." That's just not happening. Whether the iPod becomes commoditized like Sony Walkmen or survives it's adolescence is something for the market to determine. Thomas Hazlett the author of the article goes on to ponder about Apple's market share.
That share is still low – just 3 per cent for desk tops, about twice that for notebooks – but a much bigger run may be in the offing. That is because of the plague that has hit the Windows world. Apple, with its tight, integrated interfaces cinching hardware to software has proven powerfully resistant to viruses and spyware, the poisonous infections of the Internet. Meanwhile, Microsoft users scramble to update their software with the latest patches, frantically downloading anti-viral software, running and re-running spyware disinfectants. With the Mac offering equally proficient word processing, presentations, spread sheets, web browsing and email, along with the standard multi-media applications, many are asking: Why bother?
Why bother? Really, the answers are easy, because in order to use an Apple you have to tolerate Apple, and most customers are not going to put up with Apple's penchant for secrecy, their full price operating system upgrades, their take it or leave hardware, and the arrogance of the company.

Sure Apple's market share will grow but to what, 4 or 5%. Linux has already or will soon pass Apple on the desktop. That leaves the real question remaining, why a company with the world's best operating system running on the most elegant hardware has only been able to eke out a less than 2% worldwide market share. Of course we could be really mean and say, "how could you possibly do it twice."

The answer requires looking inward at the dysfunctional company that Apple has become. The iPod is a flash in the pan, to be followed by more of the antics of the only company in technology besides Oracle that has remained without adult leadership. For more details try my ApplePeels blog.


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