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  • A Look at Apple’s Golden Opportunity

    March 2nd, 2009

    You’ve probably read those reports that PC sales are widely expected to contract this year by nearly 12 percent. This should come as no surprise, considering the shaky economic climate. As with autos, owners of personal computers will try to stick with the ones they have, spending money on upgrades rather than on replacement hardware. Or perhaps they’ll just decide to leave well enough alone.

    Certainly, Apple is not immune. You’ve already heard of surveys indicating that, for the first time in a few years, Mac sales have dropped as well, though only slightly. It’s not at all certain, though, whether you can believe those figures, because they said the same thing about iPod sales last quarter, and yet Apple managed to eke out an small increase, largely because of overseas sales. They were actually down in the U.S.

    Now the tech pundits, whom I rag on regularly because many deserve it, will continue to insist that Apple has to cut prices to the bone to survive. Otherwise folks will blow what little money they have left on a cheap PC box and be done with it.

    Yes, it’s real easy to be an armchair critic, because you don’t actually have to prove you know what you’re talking about, talk is cheap and Internet bandwidth plentiful.

    So far, there’s no indication that Apple is paying heed to such demands, though I should imagine that, if sales were to drop precipitously, they might have to revise their marketing strategy. For now, you can expect Apple’s prices to remain the same as they continue to upgrade hardware over the year (and this is written in advance of today’s product refresh where they did precisely what I suggested).

    Besides, Apple still has some $28 billion cash on hand, more than Microsoft, so they could easily sustain an extended downturn and not suffer seriously. Well, maybe Wall Street will freak, but in the real world, it wouldn’t hurt the company. They might have to cut production, but no Apple employees would need to lose their jobs as a result. Remember that pretty much all Apple gear these days is built by third-party contract manufacturers, so production plans don’t really hurt Cupertino directly.

    The situation may also present a golden opportunity for Apple to steal even more market share from Windows. You see, I expect those who can afford a new computer might be more inclined to seek longevity, extra value for their hard-earned money. It wouldn’t necessarily make a whole lot of sense to get a cheap box this year, only to have to discard it next year when it becomes malware-ridden and the cost of cleaning it up to restore “like new” performance isn’t worth the effort.

    This doesn’t mean that Apple’s more expensive models would stand to gain. Any Mac you can buy is a superior value to any Windows box of a comparable or even greater price. This isn’t one of those fanboy-style declarations. It’s been true for years that Macs tend to hang around longer than comparable PCs. While the components may, these days, be essentially the same, Apple has traditionally used extra care in the design and assembly package. That has to count when a long and useful life is considered.

    Certainly, it doesn’t appear that Apple is cutting back on its advertising, or emphasizing cheaper models. Consider that ubiquitous TV spot for the 17-inch unibody MacBook Pro. Lest you forget, that particular model retails for $2,799, and Apple’s pitch ignores the price-tag and emphasizes the eight-hour maximum battery life, the ability to handle up to 1,000 recharges and its easy recycling capability.

    Certainly, this battery’s advances more than compensate for the fact that it’s not easily removed, and that you are urged to go to an authorized Apple reseller for replacement. That, however, isn’t going to happen for at least three years, allowing for full charge/discharge cycles every single day, with a tolerance of lesser battery life when the maximum number of charges has been exceeded.

    At the same time, Microsoft’s credibility seems to lessen by the day. Sure early reports of the Windows 7 beta have been favorable, but it already appears they are making interface changes based on customer responses. You’d think Microsoft would understand the process by now, and not have to make wasteful alterations to their operating systems after they achieve the beta process. I know that if I held any Microsoft stock right now, I would be protesting loudly and regularly over the company’s inability to build reliable operating systems in a timely fashion, not to mention their total lack of true innovation.

    Yes, despite the hazards of figuring out profitable pathways during a prolonged economic downturn, it does appear that Apple knows what to do and will, as they say, stay the course. So when the climate improves — as it inevitably will regardless of how they mess up the situation in Washington, D.C. — Apple will be more than ready to ride a new wave of popularity and sales.



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