Taking a bite out of someone else’s Apple

The man shown here is probably worth at least $40/share of the Apple stock price, probably more. Call it the Steve Jobs premium, but it is not undeserved for someone who has managed two large paradigm shift in just the last decade, first dominating the MP3 player market and changing the way music is sold on line, and then shifting the way the consumer cell phone market works. Oh, and lest anyone forgets, Apple still derives a of its revenue and profits from the Mac, which was essentially an industry wide joke a little more than a decade ago. All this for a 53 year old, it ain't bad.

In the case of the iPod and the iTunes online store, Jobs had taken a music industry to a different level, and you could say he has effectively obsoleted CDs. Apple has just been ranked the top music retailer and that’s just using a virtue store. The market for the iPod isn’t just about music either, with the iTouch and video capability, it is likely that online videos will also be a target for Apple down the road. It doesn’t hurt that that Macs also provide a great avenue for the video market.

Shortly after the iPod, Jobs launched another coup by changing the way the cell phone market works. Before he introduced the iPhone, everyone was selling phones like disposable razor blades, and the idea of paying equipment marker a part of the subscription fee for the consumer market was crazy. But along comes Jobs with the iPhone and everything is turned upside down. All the hype, and Apple hasn’t even really starting selling in Asian markets yet where the iPhone has already reached iconic status. Then there is the expected iPhone push into the enterprise market, RIM territory. The iPhone seems like it is on just the beginning of a very profitable growth trajectory.

Finally, there is the Mac, virtually declared dead about ten years ago, thanks to Wintel, Mac has clawed back its share of the PC market to more than 8%, this is coming back from a market share of under 5% and declining in the late 90s. With the introduction of the various Mac models, Apple is continuing to focus on the PC market, although it is likely that this push is aimed partly at the overall home electronics industry. With a phone, a portable music player, it is only logical that eventually Apple will try to merge the Macs in some way, shape, or form to TVs.

Apple has gotten rich by eating the lunch from everyone else’s plate. The music industry was a test, since one could say that the sales and distribution model was a dying form, once he had succeeded. Jobs moved on to cell phones where the competition is a lot stiffer. It’s anybody’s guess what Apple will do next.

The last decade for Apple is nothing short of stunning, and most of the credit can be attributed to Steve Jobs. His vision has managed to push Apple not only into the music business, but the cell phone business as well. Jobs is also a master at marketing, after all, how else can one attribute the frenzy around the iPhone. To such an extent that a shortage of iPhones in Apple store can be construed as a sign of Apple's imminent move to a 3G platform.

In terms of Apple stock, the earnings will be announced on April 23, I expect a very good quarter. The downside is that Jobs and company tend to be conservative on their guidance, this is something they did in January, and it tanked their stock by $20/share. With the high exposure to the consumers, Apple might guide conservatively again. Apple has bounced back from its sub $120 price after dropping nearly 40% from the high of $200 in the beginning of the year. The stock can probably go higher, but the guidance will be the killer in this mix. If you’re like me who bought too high, the only thing to do for now is to wait, and hope Apple guides sufficiently well to have stock price go up again. But if you have the cash, buying the stock now might not be such a bad idea.