As is usually the case following a Steve Jobs' keynote address at Macworld, the Apple universe was in a tizzy this week, buzzing about the new products that Jobs announced — including an ultralight notebook — and whether they were the best thing ever or merely superfantastic.
However, while the gee-whiz effect of new products creates sizzle, the steak for Apple is in actual sales of existing products. Luckily for Apple fans, there is some meat there, as the company continues to grow its market share in both desktop and notebook computers.
Yesterday, investors — and investment analysts — seemed a little morose about the Jobs' keynote, perhaps in part because of what Apple didn't announce, including a 3G version of the iPhone, more international versions (such as a Canadian model) and strong Christmas sales.
The stock fell by almost 6 per cent on the day of the address, and dropped another 5 1/2 per cent or so yesterday. At $159.64 (U.S.), Apple's shares are now almost 20 per cent lower than they were just a month ago, when the stock hit a 52-week high of $202.
At the same time, however, some of those who are focusing on more than just the keynote see reason for optimism.
According to reports from both RBC Dominion Securities and Piper Jaffray, Apple's sales of computers — particularly laptops — continue to soar. Piper Jaffray estimates that Mac sales rose more than 40 per cent in the final quarter of last year, compared with a year earlier.
RBC Dominion Securities, meanwhile, is even more bullish: The brokerage firm expects Apple's sales of Mac desktops and notebooks will be up more than 50 per cent — and that laptop sales could climb by more than 60 per cent. An RBC analyst described the sales as "ginormous."
If RBC's predictions hold true, it says Apple could increase its share of the U.S. computer market to more than 9.5 per cent this year, compared with a little over 7 per cent in 2007 and about 5 per cent in 2006.
Some of the market's dissatisfaction with Apple could be blamed on inflated expectations going into the keynote, and some is likely a result of overall market nervousness about financial instability and the prospect of an economic downturn.
In that context, there are likely to be some nervous glances at Apple's market valuation, which is larger than IBM's at the moment, and in reach of networking giant Cisco Systems. But there is no question that Apple's fundamentals are fairly strong — and according to some, getting stronger.
As more than one analyst noted, not only are Mac sales growing rapidly, but Apple's profit margins are increasing on both its desktop/laptop sales and its iPod sales, as the price of underlying components continues to fall.
When the iPod first started selling well, and appeared to be on its way to dominating the market for digital music players (something it has since achieved), there was much debate about whether Macs would enjoy a "halo effect" as a result of increased interest in Apple products.
That question appears to have been answered in the affirmative. Overall PC market growth is in the low double digits, according to most estimates. And yet Apple is growing at 40 per cent.
Maybe there's something to that old Steve Jobs "reality distortion field" after all.
