David Lentz

Apple: Six Factors To Watch Beside The iPhone

I agree, the .Mac program is insignificant in determining whether AAPL is a buy or not. Does anyone look at paid Hotmail subscriptions or paid MSNET memberships when evaluating Microsoft? While if these subscription-based programs ever really took off, they might add to the bottom line or increase the brand attraction to potential customers, but in the real world these things never seem to work out for any company -- except RIM or Tivo, whose subscriptions are essential to their existence. I think that for a subscription to be material to a company's success, the company must be in the service business and not using a service to sell a product that has many better alternative services available to complement it, and doesn't really require any services at all to express the value of the product.

Santa Rosa is the name for a future Intel cpu that includes an integrated HSDPA modem. I think assuming that HSDPA is a make-or-break technology, in the face of all the competing wireless connectivity schemes, is pretty dicey. The only thing HSDPA has going for it today is that it is at&t's designated (for now) high-speed broadband wireless technology, with only a minor rollout to date. It's certainly within the realm of possibility that at&t would change direction, given their weak push toward getting broadband wireless as a major part of their networks. When I see ubiquitous HSDPA service and lots of people rushing to sign up and use it (the recent Cingular numbers certainly show lots of people signing up, but I see no indication that HSDPA has any part of that increase), then I'll be a believer instead of an agnostic towards HSDPA. Show me the users.

I too agree that dual OS's (Windows and OS X) is an infeasible model for an ongoing ownership. The only reason Boot Camp is offered is to provide an easy migration path to OS X. If it turns out that customers do not accept OS X as a complete replacement for Windows, then Apple has real problems in growing its market share beyond 20% or so. But that's quite a ways off in terms of Macintosh revenue. This is something that no one can predict, as the dyed in the wool MacHeads will not be able to comprehend how anyone would want to stay with Windows, and the dyed in the wool Windozers will have the same reaction to OS X.

What is unknown is how large is the fraction of users who could care less what OS they are using, and will accept whichever one provides them the lowest cost, easiest to use option. If that fraction is significant, and Apple is able to deliver the goods and communicate its message, then their future has vast potential in personal computers, as well as in consumer electronics.

When one considers the consolidation of consumer electronics and personal computing, and factor in the strong position Apple has in entertainment media (music, video), it is entirely possible that they might fail to make significant inroads into corporate computing and yet still own the consumer side of the business.

The AppleTV should be closely watched as an early indicator of how well they are doing here. Thus far, despite having had Windows Media Server on the market for quite a while, Microsoft does not appear to be making any inroads into the living rooms of Joe and Jane Consumer. Apple may or may not do any better. We'll just have to watch and see.