Mac Scope

Redefining Apple's Market

Stephen Van Esch - 2002.01.09

No doubt about it, the new iMac is a machine that people will either love or hate. Apple has again rewritten the rules of how a computer should look and perform.

With the release of the new iMac, however, Apple has further blurred the line between the consumer electronics and computer worlds. Apple is continuing the push toward moving the computer out of the office and into the living room.

As Apple continues to do this, it might be to their benefit to start redefining which market they are really part of. Defining this will go a long way to helping investors correctly assess the value of Apple.

It's not news that Apple doesn't hold a dominant position in the computer market. Their minority market is the single biggest drag on the company's image and stock price. No matter how great the products are or how splashy the press events become, Apple will never have the same clout as Microsoft and the PC manufacturers. Apple is a minority player, and it's unlikely that they will ever be a majority player again. Sure, their influence is far bigger than their actual market share, but influence doesn't increase the stock price.

With the consumer electronics strategy, Apple has a real opportunity to redefine what it is and does in the eyes of investors. By stating categorically that they are a consumer electronics company, Apple could grow their market share overnight. Heck, if they defined their niche as the digital hub, they would easily be the dominant company. No company can boast the software that will work with so many different electronic devices and hardware that belongs in the living room, not tucked under a desk.

So, from 5% to 10% (depending on who's counting) of the computer market, Apple would suddenly have 100% of the digital hub market. What's that spell? Market domination. Apple would no longer have to worry about competing in the computer market and could devote more time to defining a new market segment. Armed with the great combination of software (iPhoto, iMovie, iTunes) and hardware (iMac, iPod, iBook), Apple could own the digital hub market.

Apple's current combination of hardware, software, and peripherals easily beats anything that is offered by Sony,considered to be the consumer electronics market leader. Sony hardware is a disparate array of electronic devices with no real connector. The Playstation 2 is a good start for a digital hub.

Apple, however, already has the digital hub in place - a hub that will handle many many electronic devices. Why wait for Sony to connect all the peripherals when Apple can do it right now?

A move like this would be a risky one that would involve changing how people perceive the company. The potential payoff could be quite huge, however, and Apple is already halfway there. LEM

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Stephen Van Esch is the founder and president of the E-learning Foundry, an online training resource for Mac users. Steve loves the Mac and is doubly bilingual, since he's also fluent in Windows and French.

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