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About this siteFor six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul Monday, June 28, 2004Is Apple Losing Its Sheen? WSJ (paid subscription required): "David Foley, a reseller of Apple Computer Inc. products in Philadelphia, is having a quiet summer ... [he] concludes, 'We're not setting the world on fire.' This is a problem for Apple, which convenes its annual world-wide developer conference in San Francisco today. The innovative computer maker, headed by Chief Executive Steve Jobs, has lately been showered with acclaim for its iPod digital music players and its iTunes Music Store download service. But amid the hoopla, the Cupertino, Calif.-based company is facing a dilemma: As the rest of the personal-computer market recovers from the protracted technology downturn, Apple's mainstay computer business isn't participating in the resurgent growth. Even as overall PC shipments grew 12% in 2003, Apple's computer shipments were flat for the year ... At the end of March, Apple dropped out of research firm IDC's top 10 list of world-wide computer makers for the first time ever. Apple's share of the global computer market has eroded across the home, business and government markets over the past year, dropping to 1.7% overall at the end of March, down from 1.8% in early 2003, says Gartner."
Finally, someone gets Apple's market share figure right. Bravo! "And in the company's last fiscal quarter, Apple's computer sales were sequentially flat or down across all models, particularly for its flagship iMac desktops. The trend lines are worrisome because, despite the success of the iPod, computers are still Apple's core business. The music players account for just 14% of overall Apple revenue while Macintosh computers make up most of the rest. What's more, the Macintosh is slightly more profitable for Apple than the iPod. Macintosh gross margins are 23%, according to Wall Street analysts. Gross margins for the iPod stand at 22% and are predicted to decline because of creeping competition in the music player market" .... Attempts to recruit new users to its proprietary systems, however, have faltered. Apple has launched dozens of company-owned retail stores across the country, and spends millions of dollars a year on slick ads to tout such things as Macintosh's eye-popping software, such as its iPhoto system for digital photos. Yet most of the company's advertising is devoted to the iPod and iTunes -- a fact that turns out to be something of a Catch-22: Resellers like Mr. Foley in Philadelphia say that iPod buyers sometimes wander over to the computer displays in his showroom, but that the music players -- by now practically a fashion accessory -- rarely translate into new Macintosh sales. Apple has acknowledged the disconnect ... One reseller in the Midwest, who declined to be named, said his Macintosh sales are down 25% from a year ago. 'This isn't a seasonal blip,' said the reseller. 'Apple isn't successful because its computers are priced higher than Windows PCs. If Apple would just sell for less, they just might get a higher market share.'" They might. You know, it's interesting to watch the mainstream press catch on to what I've been saying for some time now. And it's not Apple-bashing: Apple just isn't selling a lot of Macs. The company needs to do something about it, be it a consumer-electronics tsunami and/or fast new computers that actually do outperform PCs. If it can't connect on either (or, preferably, both) of those initiatives, it's Game Over. The the perceived user interface and security benefits of Mac OS X don't amount to squat if no one uses the systems Apple makes. [ Posted at 9:26 AM | Permalink ]
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