[quote]Originally posted by Fluffy:
<strong>Belle, I think we are arguing different sides of the same coin, or perhaps we aren't even in disagreement at all.</strong><hr></blockquote>
I think we are in agreement for the most part.
[quote]<strong>if you mean that Apple needs to expand their share over this last quarter, then I agree. Last quarter was terrible, due in no small part to the stagnation of the desktop lines. But as long as Apple can maintain their average over the last few years of 4-5% I don't see them being in any real trouble.</strong><hr></blockquote>
No, I think Apple needs to increase its market share above the 4-5% it holds now, and as I said before, clearly Apple agrees.
The problem lies in Apple's recent history. When Jobs returned in 1997, he chopped away a hell of a lot of dead wood, and a whole chunk of living, leaf-bearing wood while he was at it, in an attempt to save the company.
Apple dropped unprofitable lines, disposed of warehouses full of Macs, lost a decent bit of its workforce, bought back stock, offered stock to employees, and took a variety of steps to keep a dying company afloat.
Whilst taking these steps to stabilize the company, it also took steps to advance its position, most notably by creating the iMac and iBook projects, and proceeding with Mac OS X. From the summer of 1998, the steps started bringing Apple back into financial stability, and then profit, and held Apple's market share.
But it's now 2002, and despite many further steps (The release of OS X, consumer apps like iTunes, technical introductions like FireWire and SuperDrive, the iPod, LCD displays) there is no sign of that market share increasing.
So what we've got is a company without prospect for growth, and this is the main reason market analysts have been so wary, and why Apple has taken the drastic step of opening stores.
While it doesn't necessarily mean Apple will go out of business tomorrow, or even this year or next, it's a nasty hole that Apple has to climb out of. What is very worrying is that the economy problems of last year saw some of Apple's competitors bite the dust, and even so early in 2002 it looks like some more are going to disappear, but there's no indication Apple is picking up the customers.
A company with no growth and no obvious potential for growth will eventually suffer horrendously as the value of its stock drops.
[quote]<strong>However, I don't think that this is what Dell is talking about. He seems to be saying that Apple needs to expand to > 6% to continue doing what they are currently doing, and I disagree with that sentiment.</strong><hr></blockquote>
This is the point we disagree on.
He's right. Apple must
increase its customer base. It's been almost five years since Jobs started picking up the pieces of a broken Apple, and he (and his team) have done a remarkable job of returning it to a sound financial position, but in that time the company has not grown.
[quote]<strong>There is a bit of concern over the next few quarters, but that concern is that Apple will lose sales, and lower its marketshare despite the R&D spending. This is a very real possibility, but it has nothing to do with Mike's statement. As long as Apple maintains both its marketshare and its margins, they will be able to continue creating new hardware designs. Every scenario to the contrary is based on lowering Apple's share or reducing margins.</strong><hr></blockquote>
To keep up, Apple is going to have to maintain its margins, and increase its R&D budget and bottom line costs. To do this and
stay profitable, you have to increase your revenue, and the only way to do that without increasing margins (At 30%, this wouldn't be terribly popular) is to increase sales.
Apple can't sit back and just maintain current market share.
[quote]Originally posted by JLL:
<strong>It was a 37% increase compared to the same quarter last year.</strong><hr></blockquote>
Yikes, don't use the first quarter of 2001 as a comparison. That was one of the darkest times since 1997.
[quote]<strong>Rumors are just that - rumors.</strong><hr></blockquote>
Not rumors. Apple has been cutting jobs since the 50 that went last summer. There were stories in the local press before Christmas, and interviews with former employees. And Apple's CFO said there'd be further reductions during the conference call earlier this week.