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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: phbolton who wrote (44427)	4/28/2005 9:33:07 AM
From: William F. Wager, Jr.	Respond to of 213173

Will Apple See a Boost?... By NICK WINGFIELD Staff Reporter of THE WALL STREET JOURNAL April 28, 2005; Page B1 Apple Computer Inc. helped popularize on-screen icons and windows on personal computers as well as the early use of photos and videos in PCs -- only to see Microsoft Corp. and other rivals reap most of the profits from such innovations. Now, a resurgent Apple is about to beat Microsoft to market with an important file-searching technology in its new Tiger operating-system software, giving the company another chance to show whether it can translate innovation into a more meaningful share of the PC business. "I don't think the Windows world has anything like this," says Steve Jobs, Apple's chief executive officer, in an interview at the company's Cupertino, Calif., headquarters this week. But even if Tiger is an enormous hit among Macintosh fans, few observers expect Apple to see a big jump in its share of the overall PC market, let alone a return to the days of the mid-1980s, when it had 16% of the business. Last year, the company accounted for only about 2% of global PC sales, about the same level as the prior year, according to International Data Corp., a technology market-research firm. Yet by other measures Apple has never been stronger. The company has reinvented itself over the past several years with the success of its iPod portable music players. The slick devices dominate the market for MP3 music players -- with more than a 60% share in the U.S. -- to an extent the Mac never did in the PC market. The iPod, which now brings in a third of Apple's total revenue, has led a financial comeback at the company, including a sixfold increase in net income to $290 million and a 70% jump in revenue to $3.24 billion in its fiscal second quarter. Apple's stock is trading near all-time highs, on a split-adjusted basis, with the share price almost tripling in the past year. The iPod's popularity has had a "halo effect" on Apple's Mac business, which still represents the bulk of the company's sales. Apple sold more than a million Macs in its most recent quarter, or 43% more than in the same period the prior year. That growth rate was nearly quadruple that of the PC industry as a whole during the same time. As a result, Apple has notched up minor gains in market share, rising to 2.3% of new PC sales world-wide during the first three months of this calendar year, from 2% the prior quarter, IDC estimates. But some longtime Apple watchers question how durable the trend is. "We've seen this before," says David Yoffie, a professor at Harvard Business School and a board member of Intel Corp., which makes the microprocessor chip found in most Microsoft-based PCs. "Apple has some hot products, they outgrow the market for some time and those [periods] tend to be relatively short-lived." Apple faces the long-term problem that most corporate users -- outside of some design-oriented specialties -- have standardized on Windows PCs. In addition, its hardware, while attractive, has tended to be more expensive than Windows machines. Still, some analysts believe Apple could make more sustained gains in the PC market, particularly among consumers and small businesses. One important step was designing the iPod and its companion software, iTunes, to work with Windows PCs, which is exposing a class of users to its products who might never have seriously considered using a Mac. Garrett Dimon, a Web programmer in Plano, Texas, is among the new Apple converts. After years of working on Windows PCs, Mr. Dimon earlier this year purchased an Apple PowerBook laptop. He made the change after buying an iPod and using Apple's iTunes music software on a Windows PC. "I was pretty impressed," says Mr. Dimon of iTunes. "I said this was a great program and wondered if the whole experience was like that." At the same time, Apple has benefited from widespread frustration among Windows users with Internet security problems, such as viruses and spyware. Such incursions are far less pervasive on Macs, largely because the hackers who create them don't bother to target computers with such a small percentage of the market. In a report last month, Morgan Stanley analyst Rebecca Runkle estimated that as many as a quarter of iPod users might switch their personal PCs from Windows computers to Macs, based on a survey the investment firm sponsored of 400 computer users. That conversion rate could give Apple as much as a 5% share of global PC sales this year, Morgan Stanley said. While Apple exerts an enormous creative influence on the technology industry, the company's market position today reflects a fateful decision in the 1980s to be the sole maker of Mac hardware, rather than to broadly license the Mac operating system to PC makers as Microsoft did. (Apple briefly licensed the Mac software to a few other hardware makers in the 1990s, but later suspended the program.) Apple's share of the market took a further nosedive when Microsoft introduced Windows 95, which mimicked much of the Mac's on-screen appearance. Macs fell to 5.4% of global PC sales in 1996 from 8% the year before, according to IDC. "In the mid-'90s, Apple fell asleep and didn't out-innovate," says Philip Schiller, Apple's senior vice president of world-wide product marketing. "We're back innovating." One example: the Mac mini, a PC small enough to be carried in one hand. At $500, the machine helps Apple reach budget-conscious buyers, who can plug into it monitors and keyboards they already own, even those made for Windows PCs. But the lion's share of software is still developed exclusively to run on Windows PCs, including most business-oriented programs. Google Inc., for example, last year chose to offer its new hard disc-searching program just for Windows computers, at least initially. Apple says the disc-search software in Tiger is superior to Google's because it's more deeply integrated with the operating system. A Google spokesman said the company doesn't comment on competition. Apple's Mr. Jobs says he doesn't fret over the company's share of the PC market, largely because the pervasiveness of standards for digital music, the Internet and other technologies means Macs aren't as isolated from the rest of the computing world as they once were. Market share is "a lot less important than it once was," Mr. Jobs says. "I'm not sure it matters." Write to Nick Wingfield at nick.wingfield@wsj.com

To: phbolton who wrote (44427)	4/28/2005 9:52:18 AM
From: NAG1	Read Replies (1) \| Respond to of 213173

<<Apple grabs 3.6% PC market share in March quarter>> You have to wonder why would MSFT decide to put out alot of Longhorn hype this week. Did it have anything to do with these new market share numbers and the fact that Apple is releasing Tiger this week? Are they afraid of losing more market share? I don't remember what the hardware requirements for Longhorn are but if people have to buy a whole new system in order to use it, will some of those consider a Mac? My own opinion on this is that MSFT is a bit scared and is trying to plug the leaks that have sprouted in the monopoly dam they have erected. I am not saying that MSFT will lose a significant amount of market share for them but maybe Apple can get to 5-10% market share and maybe they can keep a significant amount of growth going forward which would be nice for the shareholders. JMO though. Good luck. Neal