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

To: Richard Habib who wrote (22764)	1/23/1999 8:23:00 PM
From: HerbVic	Respond to of 213173

>>...<excerpt>...Dells high-end branded workstation market is growing at 100% year over year - a market Apple doesn't have, making them somewhat more vulnerable. << As a snapshot of Apple's current product line, you are quite correct. But your observations are not taking into account the ongoing evolution in processor technology that Apple is poised to take advantage of. At some point on the 24 month horizon, we may see some high end machines coming from Apple that are multi-processor scalable at more than twice the MHz of Apple's current 400MHz ceiling. And they will be running OS X. Networked as servers with the iMac of the day, such machines could form a "high-end" segment cash cow for Apple. As for 1999, while potentially vulnerable to price predation affected by PC price deflation, Apple has shown that they are still able to clear the channel at full production capacity at higher price points than their Wintel counterparts. Apple's excellent margins are not yet under pressure. There is plenty of room for adjustment should they become under pressure. Apple, for the first time, is differentiated from the rest of the consumer products not only by the subjectively hard to sell concepts of more efficient effectors, but also by resplendent presence and color. The full product line has a cohesion of style and clarity of direction that preponderates its Wintel cousins. People are taking notice. Frustrated Windows users are peeking over the OS wall. Cheap imitators will no doubt try to usurp the company's success with Wintel boxes in teardrop shapes, with color and "internet ready" expressions of functional purpose. And there will be a great many people who will buy those machines. But the market is huge. Apple's small share leaves much room for growth. Apple is once again on the vanguard of the trend and in augmentation with products that make consumers happy. Cheap Wintel junk threatens all PC manufacturers, it's true. Apple, by "thinking different" and being different is growing mindshare. More than two thirds of computer users remain faithful to the OS on their subsequent computer purchases. To Apple that translates as "brand loyalty." Apple's vulnerability to an all out price war is eclipsed by its success in creating this "brand loyalty" and by the size of its installed base. OS loyalty on the Wintel side of the equation is irrelevant to "brand loyalty." Thus, cheap Wintel junk is a greater threat to mid priced Wintel products than it is to mid priced Macintosh products. HerbVic

To: Richard Habib who wrote (22764)	1/25/1999 8:52:00 PM
From: Robert Mayo	Read Replies (1) \| Respond to of 213173

"threatens all PC makers (Apple included) that do not have a sufficiently high-end product to offset the declining margins of the low-end." Rich, The article I linked with my post shows that, for now at least, Apple seems to be thriving despite considerable pricing pressure from the WINTEL camp. Nevertheless, your concerns about margins are understandable. After all, Fred Anderson said they would be shrinking near term. But Apple is also benefiting from the same component price drops as the WINTEL boxmakers. So, it's likely that Apple will continue to compete on price, although it's unlikely to try to match the pricing on the very low end. It's focus is likely to be perceived value for the dollar. I didn't quite follow your comments about Apple not having servers. As far as I know it does: store3.apple.com. It also has a new server software OS X (a.k.a. Rhapsody) which was recently announced. Every quarter we hear arguments to the effect that "it doesn't get any better than this"; good numbers, followed by skepticism that they can continue. Until Apple's management gives some indication it's lost sight of its objectives, I'm inclined to side with management. Bob