Friday, January 12, 2007

A (sort of) MacWorld analysis

Now the dust has settled in San Francisco, some thoughts on this year's MacWorld and in particular the Apple presentation of new products. Understand that I did not attend MacWorld!

So the "Computer" is out of the corporate name. Apple Inc. it is from now on. That makes sense, given that profit margins on cool things like iPods are higher than on less cool things like iMacs.

But, just because little was said about computers, don't think the core business is old business! OS X 10.5 is on its way and there will be upgrades to all the computers in the months ahead - that is a given. There really was little need for Apple to promote 10.5 at this time, particularly as Microsoft Vista has yet to make a full blown apperance on the market. Frequent news releases of new products and upgrades can only hep to sustain the wait for the iPhone.

Although the iPhone includes an iPod, expect a video iPod to appear before long - with wide screen and touch screen capabilities - as well as a large (>80 Gig) hard drive, something lacking from the iPhone we saw in Steve Jobs hands.

Wireless connectivity was boosted with no fanfare. This quiet evolution means that streaming of high definition video should be effective as part of the home media experience. An important piece of the puzzle. You begin to understand how well positioned Apple is in the market place when significant upgrades barely get a mention.

Now for the possible downsides.

The Cisco law suit is probably not too important but it does suggest that Apple feels it can flex its muscles against big fry like Cisco and maybe get away with it. Expect lots of legal analysis about trademarks, etc. but I anticipate a solution will be quietly worked out before too long and before the courts get openly involved.

The iPhone will not come to market for about 5 months. This is largely due to the fact that it requires FCC approval (should not be a problem). But 5 months is a long time. Just as well Apple has taken out a bunch of patents, though, as the competition will be playing "catch up" as fast as it can.

AppleTV is a great idea but it is not likely to be an item that will suddenly appear in every iTunes subscribing home. So I doubt if it will make a big contribution to the bottom line. It will, however, help to demonstrate that Apple is better positioned to provide the home media digital hub than anyone else.

Bottom line - the stock market has responded well with the stock topping out at $97/share on Wednesday. A small amount of profit taking on Thursday but that could also be due to the Cisco law suit getting front page news. Even so, a solid performance on Wall Street at a time when the rest of the market doesn't know which way to go. This time last year saw Apple's stock plummet to $50 only to recover again by year end, so can we expect the same this year? Hard to say, but then again, I don't get paid to predict the future of the stock market!