When an entirely new marketplace forms from thin air, nobody has any idea that it is forming, much less what it will develop into. When the personal computer made its first appearance, people pretty much yawned. Now the companies that began making those first computers only offer the units as part of their product base. Where the personal computer goes from here is just a dream at this point, but it is sure that it will make that first personal computer look like the typewriter it replaced.
Apple Inc., a digital products manufacturer focusing on digital lifestyle products, works to offer a spectrum of digital oriented products to consumers. Largely recognized for its personal computing products, the company is now becoming known for the variety and spectrum of digital products that it offers. The company’s computer product lines are unique, in that they are the only computer product lines manufacturer that controls the entire manufacturing process in every respect; component to software to retail. It is, however, the company’s full product line past the personal computer that is offering opportunity for non-core product growth.
In the first quarter of 2008, the company introduced its Mac Book Air. An ultra thin and light weight notebook computer, the Mac Book is being recognized as a good solid offering that keeps the product pipeline of the company flowing and generating new revenue. Regardless of how this product fairs in the short term marketplace, however, the company’s other offerings at the cutting edge consumer trends are the products to watch for revenue growth.
Being at the cutting edge of consumer trends the first years of the 21st century is a heady place. Being ready and flexible for how consumers react to a given digital product is critical for a company to remain relevant. Just because a company offers a new product line does not mean that the consumer will use that product line as it was intended. Being able to recognize how a product is being used and then capitalizing on it is the ultimate goal of the digital manufacturer that wants exponential growth. Apple Inc. has found this ability.
The company’s iPod product is an excellent example of this ability. Past its introduction, which was viewed as a leap by many into the digital music arena, the company was able to recognize how the product fit within consumer trends. It enjoyed the successes of the new product introduction but also recognized future trend direction and became involved in a project called iTunes. This recognition and involvement has catapulted the company well into the future in directions unknown. iTunes is now offering digital media well past its original music roots and will likely morph into some other digital medium distribution point in the future. If the past is any indication, the company is likely to be involved and in all likelihood fairly soon, if technological change at this point in time is any indication.
Apple inc. also looks at its distribution and service areas a bit differently than most in the digital offerings marketplace. It puts Apple Inc. employees on the front retail lines in addition to the more typical merchant, online, specialty sales channels. This helps the customers find the real power of the products, but also new ways to use the products, which is the profit driver mentioned above. Direct feed back at the retail level has become a key advantage of the company moving forward.
Like it or not, the company’s newest foray into the cellular market has been redirected with its iPhones being unlocked for general use. Instead of being committed to its AT & T system alliance, iPhones are now able to be unlocked and used around the world. In a certain sense, this is a bonus for iPhone sales as many regions of the worlds where the iPhone would not likely have found a market are now opening up. This is particularly true in China and many central European markets. Although slow out of the gate, 4 million units/200 days, it is very likely that the iPhone will have very long legs well into the future for company revenue.
Although the marketplace would like to think that Apple Inc. is an established company in an established marketplace, it is not. Neither, for that matter is Microsoft, Yahoo or Dell. The investor should remember that this digital phenomenon is in its crawling years and very few people, if any, know how it is going to grow and develop. Ups and downs in a company’s development are bound to happen; but, if a company’s short history in a market with an exceedingly steep development curve is any indication, Apple Inc. is going to be a player with solid investment returns for the entire run.
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