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  • The Apple Beating the Odds Column

    December 3rd, 2008

    So the story goes that companies with higher-priced gear will most likely fare miserably this holiday season. Yes, folks are still buying lots of high definition TVs, as an example, but they are picking the low-end or smaller screen versions. The expensive models that generate the most profits for dealers and manufacturers may not do nearly as well, because customers just don’t have the cash or credit lines.

    Now, rightly or wrongly, Apple is often criticized for having expensive products, and some even say that they are overpriced compared to the PC box competition. Now I happen to believe, based on my own comparisons, that Apple’s products are priced similar to a Windows PC with features that are closely matched both in the hardware and software. That, of course, doesn’t address the question of whether you need those features or not, of course.

    So I suppose the conventional wisdom is that Apple would encounter difficulty moving Macs and other products this holiday season, and I agree that there’s logic in that. On the other hand, Apple is also known for defying logic with their products, and that has to confound the tech pundits who keep trying to second guess the company.

    So first there are published reports that Apple did quite well during Black Friday, the day where retailers generally become profitable — and that’s where the word “Black” comes in. No, it has nothing to do with magic or convey some evil connotation. We all want our favorite stores to stay in business.

    Analysts are now suggesting that Mac sales are going to increase again this quarter, though perhaps not by the margins previously expected. Don’t, for example, expect to see Apple move three million computers, although I suppose anything is possible.

    There is also a published report that Apple is is running low on iPod stocks. Really. This is not a rumor generated by a Mac site that specializes in such things. Instead, the information comes from Shaw Wu, a respected industry analyst from Kaufman Brothers.

    The lead times for getting an iPod touch on Amazon can range from three to five weeks, so you’d have to consider them “After Christmas” presents. Spot checks at other retailers also indicated shortages. Wu concluded that, “From our assessment, we believe iPod is holding up better than most, due to its relatively low [selling price] and strong consumer understanding of the value it provides.”

    This does make a lot of sense. Nobody seems to care about the also-rans in the digital player business. It’s all about the iPod. What’s more, with prices as low as $49 for the basic iPod shuffle, Apple is delivering products that are highly affordable. So even if buyers are reducing their expectations somewhat, Apple stands to profit regardless.

    As far as computers are concerned, I expect they are doing nicely, thank you, with note-books, although the iMac remains the third biggest seller at Apple’s online store, at least as of the time this article was written. Just a few weeks ago, a Best Buy stock manager, who works in one of the branches in Scottsdale, told me they were moving tons of MacBooks, and doing quite well with the other Apple products they stock.

    What about netbooks and the regular Windows PCs? Well, I have to wonder just how well the companies who build these products are handling the marketing end. With Apple, they have a new TV spot extolling the environmental advantages of the newest MacBooks and MacBook Pros. Dell has this dumb holiday-oriented commercial featuring some regular office workers singing off-key renditions of Christmas carols. How, I ask, does that acquaint me with the advantages of choosing a Dell over every other PC box maker?

    This isn’t to say that Dell sells bad products. I still maintain that their higher-end flat panel displays are simply wonderful, and are perfect choices even for Mac users. Despite his ill-considered statement that Apple should pay back its stockholders, made over a decade ago, I have nothing against Dell CEO Michael Dell. Nothing at all.

    But when it comes to savvy marketing, Apple is way out in front. It doesn’t hurt to offer great looks, value and performance, at reasonable prices. So it does seem to me that, despite the obstacles, Apple will be a surprising success story this season.

    If Wall Street ever gets the message, the stock price may eventually rise to the occasion too.



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