Apple gets its groove on with tunes and a new bag of chip tricks

I have to wonder what Michael Dell thinks, when he flips on his TV and sees the Intel ad, announcing the chipmaker’s foray into the Apple market:

“The Intel chip. For years it’s been trapped inside PCs. Inside dull little boxes. Dutifully performing dull little tasks. When it could have been doing so much more. Starting today, the Intel chip will be set free. And get to live inside a Mac. Imagine the possibilities.”

Apple Computer is definitely on a roll. Last year was clearly the year of the iPod, and, as I write this, the billionth song has been downloaded from the iTunes Music Store. And 2006 promises to get people thinking about buying Macs – perhaps for the first time – because they have “Intel Inside.”

It’s obviously premature to proclaim that this will be a major turning point in Apple’s Mac sales, but it’s an interesting twist of fate. There will be transitional issues associated with porting apps to the new chip, and that could defer purchases even among the Mac-faithful, but this could be a major win-win-win for Apple, Intel and the user community. The Rosetta technology will keep PowerPC apps running on the new Intel architecture through a transparent translation framework, until native (dubbed “Universal”) versions are available for the leading commercial packages.

Still, the doom-and-gloomers remind us that Apple has only two per cent market share of the personal computer market and that probably won’t change anytime soon. Even the most optimistic analysts are saying that five to six per cent in two years may be a possibility. That doesn’t sound like a lot either, but maybe we’re looking at the wrong numbers.

Investors bid up stock prices based on future expectations, as opposed to current events. It’s clear that Hewlett-Packard and Dell control the PC space with 16 per cent and 17 per cent market share respectively. All other players including Apple are in the single digits. But let’s look at market capitalization. That’s the value of a company based on multiplying the number of shares by the share price. If you were going to buy the whole company, that’s what you’d have to pay. When Apple shares hit US$85 in January, Apple’s market cap was US$72 billion, compared to US$71 billion for Dell. And when you contrast Apple’s US$72 billion with Sony’s market cap of US$45 billion, Apple is clearly the largest consumer electronics company in the world. That gives you quite a different perspective on a company with only two per cent of personal computer sales.

Apple’s market cap has backed off relative to Dell since January, but the point is investors perceive a much brighter future for Apple than for Dell or Sony.

Could things go sour for Apple again? Definitely, but let’s hope not. For years I’ve had a recurring theme that consumer electronics are now driving the corporate IT world, in dramatic contrast with even 10 years ago. That theme has never been truer than it is today.

Charles Whaley has a PhD in Psychology and applies it to behavioural issues in the IT industry through his consulting and market research firm, Information Technology Enterprises.
[email protected]

Would you recommend this article?

Share

Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.


Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Story

How the CTO can Maintain Cloud Momentum Across the Enterprise

Embracing cloud is easy for some individuals. But embedding widespread cloud adoption at the enterprise level is...

Related Tech News

Get ITBusiness Delivered

Our experienced team of journalists brings you engaging content targeted to IT professionals and line-of-business executives delivered directly to your inbox.

Featured Tech Jobs