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iPod gives Apple Macintosh second wind

Posted: 25 Oct 2007 ?? ?Print Version ?Bookmark and Share

Keywords:iPod? Apple Mac? desktop? consumer electronics?

When Apple Inc. introduced the iPod six years ago, rival PC makers were probably not aware that wittingly or unwittingly Steve Jobs' team was sneaking a Trojan horse into Microsoft Corp.'s seemingly impregnable fortress.

The results are in and Apple, the company many once considered road kill in Microsoft's march to the top of the PC world, is wowing the PC community and adding thousands of new customers who's choices of computer products have been impacted by the iPod's success.

Consider this: Apple has shipped more than 120 million iPods since it began selling the digital music players in 2002. Subsequently, the company's sales of Macintosh computers have also surged with unit shipments trouncing industry growth rates.

In its fiscal 2007 Q4 ended September 29, for instance, Apple shipped a record 2.2 million Macintosh computers400,000 more than its prior recordaccording to Apple executives. With these numbers, Apple executives are convinced they are increasingly successful at introducing Macintosh computers to customers who are making the leap from Windows-based machines after purchasing iPods.

Speaking during a conference call to discuss the company's latest quarterly financial results, Timothy Cook, Apple's chief operating officer, noted "over 50 percent of the Macs that we sold in our retail stores were to customers who never owned a Mac before so we've been very successful at expanding our customer base," Cook said.

Mac reborn
At the beginning of this decade, Apple's share of the PC market had shrunk to less than five percent, leading to premature conclusions about the company's possible demise.

Apple's foray into the consumer electronics world and the wild success of the iPod series gave the company a new lease on life. In the span of about four years, Apple has gone from being a predominantly PC vendor to a predominantly consumer electronic company and back.

In the just ended quarter, Macintosh computer salesdesktop and notebooks combinedaccounted for approximately 50 percent of the company's $6.2 billion revenue. In the comparable quarter of 2006, computer sales represented approximately 46 percent of Apple's revenue.

Apple closed the fiscal Q4 ended Sept. 29 with net income of $904 million, or $1.01 per share, 17 percents above the consensus analysts' estimate of 86 cents a share and 67 percent above the $542 million, or 62 cents a share the company reported in the fiscal 2006 comparable quarter.

Revenue in the recently ended quarter also rose to $6.2 billion, up 28.5 percent, from $4.8 billion in the same quarter last year. The company ended fiscal 2007 with revenue of $24 billion, an increase of 24 percent from fiscal 2006.

A recent EETimes analysis also showed Apple's computer products accounted for 38 percent of the company's fiscal 2006 revenue, down sharply from as high as 60 percent in fiscal 2004. iPod, music sales and contributions from a subsidiary contributed 62 percent of Apple's fiscal 2006 revenue.

Shifting trend
The trend is reversing again although the company's revenue shift between computer and non-computer products could continue to swing widely as Apple sells more iPods and the recently introduced iPhones.

Apple's digital music players and wireless handsets are adding to the company's revenue stream but they are also helping to expand sales opportunities for the Macintosh both in the United States and internationally, the company said.

No wonder Peter Oppenheimer, Apple's chief financial office, sounded so optimistic about Apple's future even while analysts were weighing the negative impact of a possible slowdown in the U.S. economy on the information technology industry.

"We'll leave forecasting the global economy to others," Oppenheimer said. "Apple is shipping the best products that we have ever made in our history. We are looking forward to our best December quarter ever, as we head into the holiday buying season with the strongest product lineup in Apple history."

- Bolaji Ojo
EE Times

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