Astute analysis of Apple Inc. among mainstream financial blogs is absurdly difficult to find.

Many bloggers and analysts alike recently have concluded AAPL is a "sell" based primarily on it being a consumer technology company, and as such vulnerable to the evaporation of consumer spending we’re likely to see in the coming months.

A few weeks ago I gave some reasons why Apple should get through the looming economic turmoil better than most companies, particularly competing consumer technology companies.

But yesterday I read a remarkable analysis by Andy Zaky on the financial news Web site Seeking Alpha. Zaky’s article also appeared on his own financial blog, Bullish Cross.

In a piece called “Is Apple More Undervalued than Other Tech Sector Stocks,” Zaky compares Apple’s price-to-cash ratio with that of other tech stocks. (From Investopedia: “Price to cash flow ratio -- a measure of the market's expectations of a firm's future financial health.”)

Apple has the lowest price-to-cash ratio of all the major tech companies, despite stronger fundamentals. The lower the number, the more negative investor sentiment.

To illustrate how irrationally low AAPL has fallen, Zaky says if Google were trading at Apple’s current price-to-cash ratio, its price would be $173.84. Google closed at $359.69 yesterday.

Though AAPL has recovered to $111.04 (as of yesterday’s close) from its lows of just below $90, it remains greatly undervalued.

Zaky argues that as of now “the market has already priced in a complete destruction of Apple’s business,” an unlikely turn of events. He also has a lot of well-argued criticism of analyst projections for Apple’s 2009 earnings.

As a long-time follower of Apple, I often have puzzled over the appalling inability of so many so-called “professionals” to grasp the winning strategies and vast profit-generating potential of Apple’s various business arms.

They fuss over gross margins, agonize over the cost of components and overestimate the impact of Apple’s competitors. What they forget to factor in is the power of the Apple brand as well as the value of building superbly designed and engineered products.

It’s not that hard to figure out, people.

Zaky’s article is a highly detailed, well-researched piece of analysis. I recommend it.

Posted by David Zeiler at 8:55 AM in AAPL stock news | Permalink | Comments (2)
                       

Are Apple’s TV ads lampooning the amount of money Microsoft is spending on its Vista ad campaign the proverbial pot calling the kettle black?

The ads, particularly one entitled “Bean Counter,” features the now-familiar John Hodgman as PC Guy telling Justin Long’s Mac Guy that Microsoft would rather spend millions of dollars on an advertising campaign about Windows Vista than spend the money to fix the oft-criticized operating system.

Two other bloggers have noted that while the Apple ad knocks Microsoft for spending too little to “fix Vista,” Apple itself spends about the same percentage of its revenue on advertising and far less on research and development than its long-time rival.

They’re right, of course. In Microsoft’s fiscal year 2008 (which ended June 30), it spent just under 1.986 percent of its revenue on advertising but 13.5 percent on R&D.

Apple, in its 2007 fiscal year, the most recent for which we have complete data, spent 1.945 percent of its revenue on advertising and a mere 3.25 percent on R&D.

It would seem just looking at the numbers that Apple has unfairly maligned Microsoft. But let’s think about this for a minute.

Microsoft launched its $300 million campaign not to introduce Vista – that happened 21 months ago – but to shore up the embattled Windows brand.

After more than a year of bad publicity apparently Microsoft felt compelled to respond.

And not all the negativity came from Apple ads, either. Most of the complaints have come from Vista users and Windows-oriented publications. Apple’s ads simply have exploited this existing dissatisfaction.

But let’s get back to those numbers, shall we?

Apple does spend proportionately about the same on advertising as Microsoft does, but it doesn’t need to waste money on ads to repair an image tarnished by routinely frustrating software.

The point of Apple’s TV spots is that Microsoft should be devoting more resources to making Vista better for users rather than making ads to boost their self-esteem. If Microsoft had spent more of its vast piles of cash all along on making Windows a trim, responsive, trouble-free and user-friendly operating system, it wouldn’t have this problem. (And Macs would not be gaining market share.)

That brings us to the question of R&D spending. Microsoft outspends Apple by every measure. In raw dollars, Microsoft outspent Apple $7.121 billion to $782 million in 2007 -- a ratio of more that 9 to 1. As a percentage of revenue, Microsoft outspends Apple by about 4 to 1, 13.5 percent to 3.41 percent.

Contrary to what Apple implies in its ads, Microsoft literally spends billions on the development of products like Vista and Office.

Sad, isn’t it?

Apple spends far, far less money on R&D, but look at what it has delivered over the past few years: Mac OS X Leopard, Intel-based Macs, the iPod Touch and iPhone, the innovative MacBook manufacturing technology unveiled just two weeks ago.

More to the point, Apple regularly delivers products and services, such as the iTunes Store and the iPhone, that shake up entire industries. When was the last time Microsoft did that?

What does Microsoft have to show for its billions invested in R&D? Vista? Office 2007? Hardly groundbreaking. The Zune? A decent MP3 player, but it’s had minimal impact on its market.

And so it goes with Microsoft’s product line. Almost in defiance of the prodigious amounts of money the company invests, Redmond’s creations rarely have the capacity to excite. Even the celebrated Xbox is little more than another game console.

Admittedly Apple’s ads bend reality a bit to poke a Microsoft sore spot. But Apple’s ads aim for a truth that isn’t told in the numbers.

Call it artistic license.

Posted by David Zeiler at 1:57 PM in Taunting Microsoft | Permalink | Comments (4)
                       

Showing surprising strength in a weakening economy, Apple reported an extraordinary September quarterextraordinary September quarter yesterday.

Mac sales up, iPod sales up, iPhone sales way, way up, and an uncharacteristic appearance by CEO Steve Jobs at the analyst conference call. It’s hard to know where to begin.

Jobs showed up in part to discuss Apple’s decision to disclose some alternative financial data from now on. Because Apple periodically issues free software updates for the iPhone and Apple TV, revenue from those sales is recognized over the two-year life of the product rather than entirely in the quarter the product is sold, as with Macs and iPods.

To help analysts and investors better “evaluate the company’s overall performance,” Jobs said the company plans to release “non-GAAP” financial results along with the usual earnings figures. (GAAP stands for Generally Accepted Accounting Principles.)

Tremendous sales of the iPhone 3G – 6.9 million units – prompted the change, Jobs said. The iPhone accounted for a whopping 39 percent of Apple’s 4Q revenue.

“The non-GAAP results are truly stunning,” Jobs crowed, and it’s hard to argue with the numbers. Including the iPhone and Apple TV sales in their entirety adds nearly $3.8 billion in revenue, a 48 percent increase over the $7.9 billion the company reported.

Non-GAAP adjusted income doubles from $1.14 billion to $2.44 billion, a 115 percent increase. For those keeping score at home, the $1.26 per share Apple reported balloons to $2.69 per share in the adjusted figures. Yowza!

Jobs probably has grown tired of AAPL’s slumping stock price – which had slid $6.95 to $91.49 yesterday before Apple announced its results. He wants the world to know how much dough Apple is really making.

Apparently investors got the message: AAPL rose $12.12 in after-hours trading and is up today in a down market.

More details from Apple’s earnings call, by topic:

The blockbuster iPhone 3G/App Store: The star of the quarter, the iPhone 3G blew away all expectations. Customers bought more iPhones in the September quarter than during the entire previous lifespan of the product (6.9 million vs. 6.1 million).

Oppenheimer said Apple has “already surpassed our goal of 10 million iPhone sales in calendar 2008,” but that claim must include some October sales. Adding the reported sales of the first three quarters of 2008, I get 9.3 million iPhones. At the rate iPhones are selling, Apple probably hit 10 million about a week or so ago.

Prospects for future iPhone sales also look good. Oppenheimer said Apple is now selling the iPhone 3G in 51 countries, with the number expected to increase to 70 by the end of the year. Apple has 3,100 iPhone distribution points in the United States and over 30,000 worldwide, he said.

Jobs pointed out that Apple beat Research in Motion’s BlackBerry in unit sales 6.9 million to 6.1 million this quarter. Furthermore, Jobs said, Apple is now the No. 3 mobile phone maker as measured by revenue, with $4.6 billion in sales (behind Nokia with $12.7 billion and Samsung with $5.9 billion).

The App Store, despite some grumblings from developers whose apps Apple rejected, has amply demonstrated the iPhone’s potential as a software platform. “Customers will download the 200 millionth application from the App Store tomorrow [Wednesday], only 102 days since its launch,” Jobs said, noting the availability of over 5,500 apps.

Jobs also said Apple’s strategy is not to build “a hundred variations” of the iPhone like other handset makers, but to use software as the differentiating factor.

The Mac hangs tough: Mac sales fell slightly short of last month’s optimistic analyst projections, but at 2.61 million units still set a record for most Macs sold in a quarter. The growth rate of 21 percent year over year wasn’t as impressive as March’s 51 percent or June’s 41 percent, but remains respectable.

Apple CFO Peter Oppenheimer said cutbacks in education budgets as well as rumors of imminent new MacBook models (which Apple did indeed unveil last week) probably hampered Mac notebook sales at the end of the quarter. Two-thirds of all Macs sold are notebooks.

Apple has its corporate fingers crossed the new models will boost notebook sales going forward. “We’ve had a very, very strong launch and we are anxiously awaiting to see the demand trajectory that will unfold during the quarter,” Jobs said.

When asked if Apple would consider “more affordable” Macs, Jobs repeated a long-standing Apple philosophy: “There are some customers we choose not to serve,” he said. “We don’t know how to make a $500 computer that’s not a piece of junk.”

If fresh iMacs appear in November as rumored, unit Mac sales could set another record come January.

iPod not dying: Apple sold 11 million iPods in the quarter, a record for a non-holiday quarter and an 8 percent increase year over year. Market share for the iPod remains at a healthy 70 percent. The iPod stubbornly continues to defy predictions of its decline.

During what could be a bleak retail holiday season, the line of iPods refreshed in September should keep it high on many shopping lists.

Apple TV on pause: Jobs reiterated his take that Apple TV is “still a hobby.” He said it would stay that way at least through 2009, dashing the hopes of those dreaming of a major Apple TV announcement at the annual Macworld Expo in January.

More stores: The growth of the retail chain continued unabated, with the addition of 31 new stores, bringing the total to 247. As always, Oppenheimer said half of all Macs sold in the stores were to people who had never owned a Mac before.

The stores saw 42.7 million visitors in the quarter, another record and further evidence that the ailing economy has so far failed to impair the lure of the Apple brand.

Rainy Day Fund pays off: Having generated another $3.7 billion in cash, Apple’s stockpile of money stands at $24.5 billion. Jobs brushed off a question about returning some cash to shareholders in the form of dividends. “It’s not burning a hole in our pocket,” he said.

But Jobs also said Apple’s unusual cash position “provides us tremendous stability and the ability to invest our way through this downturn,” which he said means more money going into research and development of future products. He wouldn’t comment, however, on the possibility of acquiring other companies.

Posted by David Zeiler at 1:06 PM | Permalink | Comments (1)
                       

Having had some time to ponder on and learn more details about Apple’s new line of notebooks announced last week, a number of things occur to me:

Price cut veils price hike: Steve Jobs masterfully obfuscated this by keeping the previous plastic MacBook on the roster, but Apple’s new consumer notebooks do in fact cost more than those they replace. Previously the low-end MacBook cost $1,099; the cheapest aluminum MacBook is $1,299, a $200 increase. A MacBook with a slightly faster processor and bigger hard drive costs $1,299; its aluminum equivalent is $1,599, a $300 increase.

The already expensive MacBook Pro line escaped any increase, but higher prices on the consumer models makes them tougher for students and home users to afford. It seems an odd strategy in the face of a dark economic forecast.

True, the aluminum MacBooks have better graphics and those fancy multi-touch glass touchpads. But still. In the past Apple has often conferred significant upgrades on a line of Macs while maintaining or dropping prices. These MacBooks don’t even have a FireWire port, for Pete’s sake.

And yes, you can buy the “old” MacBook for $999, but that’s yesterday’s technology. Remarkably, most of the news stories last week emphasized not that the new MacBooks cost more, but that Apple had dropped the price on the old model. Brilliant!

Even more remarkably, the $999 MacBook was widely – and erroneously -- reported as “Apple's first sub-$1,000 notebook.” Apple’s first offered a sub-$1,000 notebook back in November of 2002 when it dropped the price on the iBook G3 to $999.

Reality distortion field, indeed.

“Mystery product” revealed: At July’s earnings conference call, Apple CFO Peter Oppenheimer referred to a “future product transition” that would lower gross margins for the September quarter, setting off speculation that Apple had some exotic new product in the wings. It turns out Oppenheimer was referring to the manufacturing method of carving the new MacBooks out of a single block of aluminum. Impressive to be sure, but many had hoped for a smaller “netbook” type of product or even a touch-screen tablet Mac.

Death of FireWire? I noted in my post last week on the new MacBooks that the consumer models lacked a FireWire port (the Pro models retain a FireWire 800 port). I shot off an email to Apple PR asking for an official explanation that they predictably ignored.

Over the next few days the Mac Web exploded with complaints, with many swearing not to buy a new MacBook until Apple restored the FireWire port. One Mac fan in Germany even started an online petition.

Steve Jobs reportedly sent a customer an email explaining that most digital video cameras now use USB 2.0, negating the need for FireWire on the consumer MacBooks.

But FireWire isn’t just for digital video. For many, FireWire’s Target Disk Mode (which allows a Mac attached to another by FireWire to access the second Mac’s hard disk as if it were an external drive) is an indispensible troubleshooting tool. Some just use FireWire to attach speedier external drives. And others use FireWire for digital audio as well as digital video.

While USB 2.0 can perform all of these tasks (except Target Disk Mode) to some degree, FireWire performs them faster, particularly when transferring large amounts of data.

Apple played a key role in the development of the FireWire (IEEE 1394) standard; you’d think it would be the last PC company to drop it from a product line. Though FireWire never became he ubiquitous standard that USB 2.0 has become, many Mac users nevertheless have a legitimate need for it. Apple pulled the plug on FireWire in the MacBook a bit prematurely, in my opinion.

Some users worry FireWire will gradually disappear from all consumer Macs, remaining only on the pro models as an enticement to upgrade. We should get an answer to that question when the iMac line is refreshed, which could happen before the end of the year.

Posted by David Zeiler at 8:29 AM in MacBook | Permalink | Comments (2)
                       

Less than a year after the January debut of the personal database app Bento, FileMaker has delivered Bento 2, spiffed up with enhancements current users should welcome.

I wrote a blog post about Bento in May when I stumbled upon it while trying to answer a reader’s question about whether an affordable Mac OS X database program for home users existed. Bento fills the hole left when Apple discontinued the AppleWorks software suite, which had included a database module.

Bento 2 retains the look and feel of an Apple-made app such as those in iLife and iWork while finding even more ways to closely integrate with Apple software --something one would expect from a wholly owned subsidiary of Apple.

Those who liked Bento’s integration with iCal and Address Book will like how Mail works with Bento 2. If you create a Mail message field, you can drag relevant emails directly into the Form View of the record. A Quick View button allows you to read the message without going into the Mail app itself.

While the first version of Bento automatically imported data from the user’s Address Book and iCal apps, getting data from older database files wasn’t so easy. Bento 1 could read comma-delimited files (.csv), but people with old AppleWorks 6 databases could not export in .csv. (I used Microsoft Excel as an intermediary.)

Bento 2 solves that by allowing users to save AppleWorks 6 database files in as ASCII format with a .tsv extension, which allows Bento to import it. I initially had trouble getting this to work, but eventually figured out that the .tsv extension needs to be in lower, not upper case. The ability to import AppleWorks DB files directly would be better, but this is a major improvement.

Bento 2 can import and export files directly from spreadsheet apps like Excel and Apple’s Numbers, however.

The new version also addresses my biggest gripe about Bento 1 – its inability to print more than one record on a sheet of paper in Form View. When using Table View, the new “Fit to Width” option, while not perfect, leaves your squeezed information more readable than “Fit to Page” did in Bento 1.

Data entry gets a few nice wrinkles, such as more spreadsheet-like behavior. For example, you no longer need to set up your fields in advance; you can just start typing information and Bento adds generically named fields as needed.

Another handy spreadsheet-like feature: the ability to grab the lower right handle of a data field and dragging it down will duplicate the original field’s data for as many cells as you drag the handle.

FileMaker has also made working with data easier, primarily with the addition of a split view that shows a list of all the records on top with the details of the selected record below.

As one would expect, FileMaker added to its collection of attractive Form templates (Bento 2 adds 10 new ones), but more importantly users can export and share those templates now. So if a person has created the ultimate template for stamp collecting, he or she can share it with other Bento-using philatelists.

However, if you have a great Bento library containing every fact and statistic regarding your daughter’s soccer team, you can’t share it. Well, not as a Bento file at least. You always can export it as an Excel spreadsheet, but your information won’t have the flair of Bento’s Form View.

FileMaker deserves accolades for upgrading this product so quickly and for adding truly useful features rather than flashy but impractical ones. It remains the best Mac OS X personal database option for home users and small businesses.

System requirements
Mac OS X Leopard 10.5.4
Mac with Intel, PowerPC G5 or G4 867MHz or faster processor
512 MB RAM
1 GB hard drive space recommended

Pricing
Single user, $49; Family pack (5 licenses), $99. Purchasers of Bento 1 between Sept. 14 and Oct. 28 are entitled to a free upgrade. A 30-day trial version of the software can be downloaded from FileMaker’s Web site.

Posted by David Zeiler at 2:38 PM in Software by Apple | Permalink | Comments (3)
                       

Touting a new manufacturing process, LED-based displays, glass trackpads and an innovative graphics chipset from Nvida, Apple refreshed its entire line of notebooks today.

The announcements, made by CEO Steve Jobs and several of his top lieutenants at a special Apple Media Event on the company’s Cupertino campus, confirmed most of the rumors swirling around the anticipated MacBook upgrades for the past few weeks.

Perhaps the only disappointment was in the pricing. Some had predicted an $800 entry-level MacBook, but Jobs merely announced a $100 price drop on the existing white plastic-encased model to $999, which the company plans to continue selling.

The new technologies turn up in all the new MacBooks; the backlit LED-based display technology also turns up in two refreshed 17-inch and 24-inch Cinema Displays.

According to as video shown at the event, LED display technology is brighter, boasts “instant-on” capability and is 30 percent more energy-efficient traditional flat-screen displays.

Perhaps the most dramatic new technology from a user perspective is the glass multi-touch trackpad, which is included in all the new models except the MacBook Air.

With the glass trackpad, Apple has dispensed with the button, providing 39 percent more surface area. The trackpad itself is now one big button so you can click on any part of it.

Building on the iPhone and iPod Touch interfaces, the glass trackpad enables a few new gestures, including some that require three and four fingers. It may take some getting used to, but using gestures as a primary means of controlling a computer could well replace the veteran mouse.

The MacBooks also will sport a new integrated graphics chip from Nvidia, the GeForce 9400M. Jobs said the chip is five times faster than the Intel GMA integrated graphics chip used in the previous MacBooks. In real world use, Jobs claimed the Nvidia chip is three to eight times faster, providing half the performance of a dedicated graphics card.

The high-end MacBook Pro uses the Nvidia 9400M as well but retains a dedicated graphics card, the Nvidia 9600M GT. Yep, you get both. The rationale? The 9400M is more energy efficient; “Turbo mode” with the 9600M GT costs you an hour of battery life. So the user can switch between the two depending on the priority.
Apple spent a fair amount of time boasting about its new manufacturing process.

Originally devised for the ultra-thin MacBook Air, the process starts with a solid block of aluminum, which is cut and carved into the desired configuration. Apple Senior Vice President for Industrial Design Jonathan Ive explained that this method results in lighter, more rigid notebook frames than building them the old way with multiple parts.

The specs on the new goodies:

MacBook Pro
$1,999 model: 15.4 inch LED display, 2.4 GHz Intel Core 2 Duo, 2 GB RAM, 250 GB hard drive, SuperDrive, GeForce 9600M GT with 256 MB RAM. Shipping today.

$2,499 model: 15.4 inch LED display, 2.53 GHz Intel Core 2 Duo, 4 GB RAM, 320 GB hard drive, SuperDrive, GeForce 9600M GT with 512 MB RAM. Shipping today.

Notes: The MacBook Pros get a FireWire 800 port, but no FireWire 400 port, a bad omen for the FireWire 400 spec. However, Apple has added an ExpressCard/34 slot.

MacBook (new aluminum models)

$1,299 model: 13.3 inch LED display, 2 GHz Intel Core 2 Duo, 2 GB RAM, 160 GB hard drive, SuperDrive, GeForce 9400M integrated graphics. Shipping today.

$1,599 model: 13.3 inch LED display, 2.4 GHz Intel Core 2 Duo, 2 GB RAM, 250 GB hard drive, SuperDrive, GeForce 9400M integrated graphics. Shipping today.

Notes: The consumer-level MacBooks drop FireWire altogether, and don’t get the ExpressCard/34 slot. Sayonara, FireWire.

MacBook Air

$1,799 model: 13.3 inch LED display, 1.6 GHz Intel Core 2 Duo, 2 GB RAM, 120 GB hard drive, GeForce 9400 M integrated graphics. Shipping early November.

$2,499 model: 13.3 inch LED display, 1.86 GHz Intel Core 2 Duo, 2 GB RAM, 128 GB solid-state drive, GeForce 9400 M integrated graphics. Shipping early November.

Notes: The MacBook Airs did not get a price drop, just some beefed up specs and some of the new technologies shared with its MacBook siblings, such as the Nvidia 9400M and a mini-display port.

One More Thing: Apple COO Timothy Cook opened the presentation with a few word on how well the Mac business is doing. He mostly repeated things avid Apple followers already know, but offered some impressive market share figures.
According to Cook, Apple now has 17.6 percent of the U.S. PC market by unit sales and 31.3 percent of the U.S. PC market by revenue.

He also tipped his hand a bit on the Oct. 21 earnings conference call when he noted that Apple has sold 7.1 million Macs so far in 2008. Subtracting the Macs sold in the first two quarters, that means Apple sold about 2.3 million Macs in the September quarter, fewer than many analysts expected.

The impressive recovery of AAPL stock in the past few trading sessions could be in for a setback when Apple announces its earnings next week.

Posted by David Zeiler at 4:14 PM in MacBook | Permalink | Comments (2)
                       

I logged on to PowerSchool for the first time the other day (my daughter’s school delays its use until third grade) and had to chuckle at its startlingly Mac-like appearance. But I can’t say I was surprised.

Back in 2001 Apple acquired PowerSchool, a small Folsom, Calif.-based company that had developed a Web-based student information system parents could use to track their child’s grades and assignments.

Though Apple sold PowerSchool to Pearson Education in 2006, the company’s five-year association with Apple clearly never wore off.

The look and feel of the PowerSchool site closely mimics that of Mac OS X, but is stuck in the Jaguar era (OS X 10.2) -- right down to the background pinstripes.

(click to view larger image)

Even better than the nostalgia for bygone versions of OS X is PowerSchool’s calendar option. In addition to logging in to the site to check on your child’s attendance, assignments and test scores, you can enable a subscription feature that downloads the data over the Internet and loads it into your calendar application.

Well, you can if your computer happens to be a Mac. The subscription calendars work exclusively with Apple’s iCal.

Oh, the delicious irony! How many times have Mac owners experienced the frustration of encountering “Windows-only” features? For once, the tables are turned.

True, PC owners can get all the same information I can via the Web site. But I can get it in a different, more flexible format. You’ll have to pardon me for gloating.

All that aside, PowerSchool is a superb tool for helping parents stay on top of their child’s academic activities. Every school should use it, or something like it

Posted by David Zeiler at 9:09 AM | Permalink | Comments (6)
                       

After yesterday’s Wall Street carnage, AAPL stood at $89.16, down over 9 percent for the day and 55 percent for the year. It’s been an ugly month.

Of course, to a large degree Apple is caught up in the whirlwind of panic selling gripping financial markets the world over. But other information, particularly the downgrade of the stock by two analysts last week, hasn’t helped either.

Both Kathryn Huberty of Morgan Stanley and Mike Abramsky of RBC Capital downgraded Apple last Monday (Sept. 29), which contributed to that day’s 17 percent drop in the stock’s value. Both analysts pointed to slowing consumer demand as a primary source of concern.

Two weeks ago I wrote on this blog that AAPL was getting hammered unfairly. With its strong growth trends over the past two years and a good earnings report expected Oct. 21, I argued the company was well positioned to prosper in 2009 despite a bumpy economy.

A lot has happened in the past two weeks.

Consumer trepidation stemming from the cascade of crises on Wall Street has intensified, and retailers fear the worst holiday shopping season in years. While no one knows yet how hard “Main Street” will get hit, you can bet almost everyone will be cutting back on their spending in the months ahead.

Rockville, Md.-based ChangeWave Research added to the gloom with a report that its latest survey of consumer PC purchasing habits showed a significant drop for the Mac. Those who said they planned to buy a Mac laptop in the next 90 days dropped 5 points from August to September (34 to 29 percent), with those planning to buy a Mac desktop falling 4 points (from 30 to 26 percent).

Apple inevitably will feel some pain. Economic troubles overseas also will negatively affect Apple, as the company has worldwide operations. The iPhone faces competition from Research in Motion’s forthcoming touchscreen Storm as well as smart phones running Google’s Android operating system.

But I still think Apple will weather this recession (I know one hasn’t been declared officially yet, but it won’t be much longer now) reasonably well. Here’s why:

The stash Apple has $21 billion in cash stowed away. While other businesses may struggle due to the frozen credit markets, Apple has little need to borrow money.

Mind share Apple has an extraordinarily powerful brand, particularly in the music space and among young consumers. Piper Jaffray’s survey of teen consumers released yesterday showed 84 percent of those with an MP3 player owned an iPod. Of those who purchased music online, 93 percent use the iTunes Store. Of those planning to buy an MP3 player (about a third of the respondents), 79 percent planned on getting an iPod.

Apple also stands to benefit from having products – such as the iPhone 3G and new line of iPods – some people crave so badly even lean times won’t prevent them from buying.

Finally, the Mac has established itself as a viable alternative to Windows PCs in the minds of consumers. Though fewer PCs will be sold, more of them will be Macs than if the economy had wilted two years ago.

Commitment to innovation When the U.S. economy was in a funk in 2001, Apple CEO Steve Jobs rejected conventional wisdom: “We're not laying off boatloads of people,” he said in July of that year. “We're taking those talented people and saying that if we're going to get out of this, we're going to get out of it by innovating our way out of it."

Three months later Apple introduced the first iPod.

According to the 9to5Mac Web site, Apple on Oct. 14 will debut new MacBooks based on an innovative manufacturing technique that carves the laptops out of blocks of aluminum. It sounds crazy enough to be true. It could be that mystery product Apple CFO Peter Oppenheimer referred to in July's earnings conference call.

Regardless, Jobs and his lieutenants know innovation is Apple’s strength in both good times and bad. Bold new products keep the media -- and hence the public -- focused on Apple.

Unveiling compelling new products while its competitors retrench will give those consumers who are still spending one more reason to choose Apple.

Oct. 9 UPDATE: I just received an e-mail invitation to an Oct. 14 Apple Media Event in Cupertino. The teaser simply says, "The spotlight turns to notebooks."

Posted by David Zeiler at 12:27 PM in AAPL stock news | Permalink | Comments (4)
                       

Last week I read with alarm reports that Apple’s mightiest Mac, the Mac Pro desktop, could emit toxic gases.

I am alarmed not only at the notion Apple could have sold a device that -- simply by turning it on -- could damage the health of the user, but because I own a Mac Pro myself.

This news originated with the French newspaper Liberation (available in English via an awkward Google translation), which reported that a molecular biologist working for a French national agency in February 2007 grew suspicious when he noticed an odd smell coming from his new Mac Pro.

After 10 days of using the new Mac, the scientist experienced pronounced eye and throat irritation. He contacted AppleCare, which dispatched a technician to switch the power supply. The odor remained.

Apple even replaced the system with another Mac Pro but that, too, vented the same strange smell.

Finally, the scientist had the gases analyzed by another lab, which detected seven “volatile organic contaminants,” including benzene, a commonly used industrial solvent and a known carcinogen. Prolonged exposure to benzene vapors can cause such illnesses as leukemia and lymphoma.

The scientist sent the lab results to Apple, which characteristically has sat on the information. After he published his report on the Internet, Apple phoned the scientist to tell him it would “resolve the problem within eight days.”

As it turns out, many Mac Pro owners back in 2007 noticed the same unusual odors coming from their computers and were discussing it amongst themselves, including on Apple’s own forums. Browsing through the discussions, its evident that few if any of the Mac Pro owners had any idea how dangerous the gases might be, though some expressed concern.

A reader of ZDNet’s Apple Core blog said AppleCare of France confirmed the problem to him over the phone, but said it affected Mac Pros built before 2008.

The original four-core Mac Pro debuted in August 2006; Apple added an eight-core version in April 2007. Those models were sold through January of this year, when the current version replaced it. That’s a lot of Mac Pros potentially affected.

To my relief, my Mac Pro is an early 2008 model, which Apple has said is safe. Thankfully I’ve never noticed any strange smells coming out of it.

What really bothers me, however, is Apple’s silence on this issue, despite having been made aware of it many months ago.

This is not a trivial matter. This is not about a battery a user can’t remove. This is not about discolored plastic casing on a laptop. This is not about losing access to your e-mail account for several days.

This is literally a life-threatening situation. Owners of these machines are scared and worried. If Apple has proof the smells coming from first-generation Mac Pros are harmless, it needs to make a public announcement to alleviate the concern.

If Apple in fact has learned the fumes are dangerous, it will need to do much more. In either case, keeping silent only makes matters worse.

If there’s even the smallest chance some Mac Pro owners and their families have been exposed to hazardous gases, Apple needs to alert them immediately so they can seek medical attention. And those Mac Pros would need to be recalled.

Over the past couple of years, Apple has improved on its responsiveness to customer complaints and owning up to corporate blunders like the bungled iPhone 3G/MobileMe launch.

But all that pales beside a dire health threat. Apple owes its customers an official explanation on this situation – and fast.

UPDATE: I was remiss in not mentioning that Apple has indeed issued an official statement on this matter, though it's not quite an explanation. As noted by Peter Cohen below, Apple's Bill Evans told Macworld Oct. 1: “We have not found anything that supports this claim, but continue to investigate it for the customer."

Also, it occurs to me that given the time frame involved, this issue -- while serious -- likely affected a relatively small number of users. Otherwise we would have heard much more about it long ago.

Posted by David Zeiler at 12:36 PM in Mac Pro | Permalink | Comments (3)