My journey to learn the Rip Van Winkle effect first hand has produced a list of odd and intriguing comparisons: Apple vs. Dell vs. Microsoft and the Strange New World where Apple begins to rule.
What’s going on? What happened to the earth while I was away? Will these strange days continue?
For all intents and purposes, I’ve been out of it and fully away from the Apple scene for a few months. While Microsoft’s domination of the desktop continues, and Dell’s domination of market share continues, something strange has begun to happen.
First, Apple’s stock price continues to climb to record levels while both Dell and Microsoft remain flatlined; Microsoft’s for about five years.
Indead, Dell’s market cap is barely $70-billion while Apple’s market cap is around $55-billion. Strange, indeed.
Also interesting to note is that both Dell and Microsoft have begun to miss quarterly revenue and earnings targets. That means that neither company is growing as fast as earlier years.
Apple, on the other hand, seems to break new records each quarter, in revenue, in earnings, in units of Macs shipped, and units of iPods shipped.
If Apple were a ship it would be sailing smooth with a full head of wind. Both Microsoft and Dell appear to be stuck somewhere in the Bermuda Triangle.
Just as strange is Apple’s newfound position as king of the hill for portable music players and the iTunes Music store; both garnering 70-percent to 80-percent market share.
With all those new iPods on the streets and a commanding market share, what would you expect would happen to sales at the iTunes Music Store?
You’d expect them to continue to record growth. That hasn’t happened. According to MacNewsWorld iTMS sales appear to have flatlined despite millions and millions more iPods scattered all over the world.
See what I mean? It’s a strange new world.
More strangeness comes as Apple’s Mac sales get hot, possibly due to the so-called ‘iPod halo’ effect where iPod customers rush into Apple’s great retail stores and walk out with Macs and iPods.
Macs are selling at three or four times faster than the industry as a whole. While that’s good news for Macophiles and Apple, it’s also strange since sales have increased dramatically after Apple announced a switch from IBM’s PowerPC chip architecture to Intel chips.
Everyone, including me, either expected or worried about the old ‘Osborn Effect.’ A few decades ago, a hot computer maker called Osborn, which manufactured and sold a great little CP/M machine, announced they would produce an MS-DOS machine.
Sales dried up overnight. That hasn’t happened with Apple’s switch to Intel-based Macs. Indeed, the reverse has happened. Strange.
A few years ago, Dell’s founder and CEO, Michael Dell, said Apple should close the company and give money back to stockholders. That verbal nastygram remains a good example of why CEO’s should be careful where they bite.
Sometimes things bite back.
Dell’s current CEO, Kevin Rollins, then said Apple’s iPod revolution was a one trick pony. Now his CFO says ‘the iPod has helped turn Apple around.’ and Dell blew it on portable music players.
That’s honesty and humility coming from the world’s biggest computer maker.
What about Microsoft? Well, we can’t really expect honesty and humility coming from Redmond, now can we? Desperation? Yes.
MSFT head Bill Gates is now steering the Microsoft ship in a new direction, but Longhorn (what it was before Tera Van Winkle went to sleep) is now Microsoft Vista, delayed yet again.
The brain drain at Microsoft continues as the stock price, once the darling of Wall Street, has flatlined for a full five years. Five years. Stock once made thousands of millionaires at Microsoft.
Maybe that’s why the best brains are leaving for Google, whose stock price continues to stretch to infinity and beyond. It’s about to hit $400 a share. A share.
Microsoft, still making money hand over fist, has a Price to Earnings ratio around 20 (considered pretty good). Apple’s PE is double that and the stock keeps going up.
Google’s PE is double Apple’s, and, you guessed it. The stock keeps going up.
We live in strange and interesting times. What’s going on?
Wait. There’s more. Apple just introduced a new iPod that plays video. And there’s a few thousand new music videos on iTMS to play on Mac and Windows and the new iPod. Plus, there’s movie trailers and TV shows available for a mere $1.99 per episode.
And they’re hot. ABC says Lost is the favorite and over one million have been downloaded. Now we learn that ratings for the top two hit TV shows at ABC, Lost and Desperate Housewives, have actually gone down since the iTunes Music Store downloads have been available.
Uh oh. More strangeness.
Once the God of Gadgets, Sony has fallen on hard times. Recent CDs from Sony BMG have infected Windows user’s hard drives with a dangerous ‘rootkit’ as part of an onerous copy protection scheme. Sony execs basically said, ‘Who cares. No one knows what it is!’
The public outcry and Sony’s slow but eventual backpedaling and reversal of policy shows how far removed from the customer base Sony execs really are. Is bankruptcy next on Sony’s list. What’s happening in the world.
Is there anything left that’s normal, sane, and something you can count on? Yes.
What’s really become hot, so it appears, is porn videos for the new iPods. Already over a dozen top porn sites have announced plans or are already selling porn movies in the new iPod format (same format as Lost, Desperate Housewives, music videos).
See? Not everything has gone crazy.
Barbara Marie Hambi
Welcome back, Rip. Uh, er, Tera. Yes, the past year is turning out to be a strange one, but strange in a good way for Apple users. No complaints from me.
Carol Mary Miller
I was stunned when I read about the Sony problems. They were once the company that Steve Jobs said he’d like Apple to emulate. I think Apple has supplanted Sony in some respects.
I’m a numbers kinda guy and I couldn’t be happier with Apple’s stock performance. My fear? What goes up, must come down. How long can they keep this up?
Tera, when are you going to review some Mac software? I’ve been doing almost all the reviews for months. Slacker.