Before the opening of the NASDAQ today, Apple Computer announced record breaking sales and profits in the fiscal first quarter of 2005. Sales were up 74 percent to $3.49 billion. Profits were $295 million or $0.70 per share. This is the latest confirmation that the iPod and iPod mini product lines have remade Apple.
I realize that this is not often done, but I like to think of iPods as computers in their own right for the purpose of comparing Apple’s market share to that of its competitors. (They are probably more profitable on a per-unit basis than most Macintosh computers, after all).
Financial analysts have repeatedly underestimated Apple’s growth in the last two years, even while they stand in line at Apple Stores to buy their family members iPods. A good example of this tendency is Apple’s Down-Market Gamble, an article from BusinessWeek. In it, Peter Burrows’ first thought about the Mac mini and the iPod Shuffle is cannibalization of the existing product line. This is such an obvious example of old school, “PC vs Mac” thinking, and deep seated ideas about the fact that Windows-based devices will always have more than 90 percent of the computer market in the U.S. and other industrialized nations.
As the media has gradually come to grips with Apple’s market success, most articles up to now have taken on a “yea but” tone:
- The iPod is obviously selling in huge numbers, but will that translate into sustainable growth for Apple? [ Yes. ]
- iPods are redefining the portable music player market, but is that success masking a decline in the rest of Apple’s business? [ No. ]
It’s time for the business press to move from nagging doubt to something else. We’d take disbelief at this point. The business press needs to start giving credit to Apple, because they’re the technology company that has done the best job over the last three years of presenting exciting and fun products to potential customers. The sales and profit figures clearly indicate that the public has voted with its wallets. [ Thanks to MacDevCenter.com for repeating the lead sentence in its “More News” column, pointing out a grammatical error in the process. ]