NET RESULTS: Apple is cool. Whether you care one iota about, or have ever used a product from what used to be its primary business, Macintosh computers, matters little. These days, the company is about one four-letter word: iPod.
As the San Francisco Chronicle punningly puts it: "The iPod has become the apple of Wall Street's eye." The tiny white (and latterly, multicoloured) music file players dominate the portable music player industry, even though they carry hefty price tags and have rechargeable batteries that eventually die.
Yes, the batteries (after some minor consumer backlash) can now be replaced, but this is a costly option compared to other manufacturers like Creative, which are going after Apple's Achilles heel and marketing lower cost devices with removable batteries.
Do consumers care about removable batteries? Not enough yet to knock Apple from dominating the music player field.
The company holds 65 per cent of the digital music player market overall, and an extraordinary 92 per cent of the market for players that store song files on a hard drive rather than a memory card. The third-party iPod accessories market, ranging from cables to leather covers, is alone estimated at $200 million (€151 million). Apple has sold some six million iPods since their launch as very high-end, pricey devices in 2001.
Analysts predict the company will probably move four million iPods this quarter alone, despite the premium prices ranging from $250 for an iPod mini in the US, to $600 for the high-end Photo iPod. Merrill Lynch is particularly bullish, noting in a report that Apple will likely sell 12.5 million of the things next year.
Such a consumer love affair has single-handedly sent Apple shares soaring. Apple was in the $14 range last year, and started this year around $21. Last week, Apple shares topped $62.
Analysts are now quoting prices for next year in the mid-$70s - Apple hit its high point just before the dotcom bust in March 2000, when shares traded at $72.10 - while a Piper Jaffray analyst has stated he thinks shares will hit $100 in 2005.
A better coolness index, though, is how far the iPod has penetrated into mainstream culture.
In major US cities, iPod billboard advertisements are ubiquitous. At Oracle's OpenWorld conference in San Francisco this week, at least three companies are trying to lure visitors to their display stands with the offer of winning free iPods.
And Oracle's press room is equipped entirely with large-screen iMacs for the journalists - something I've never seen except at Apple conferences. I'd guess using a Mac is a first-time experience for a majority of journalists here.
Then there's the rebellious US comic strip The Boondocks, which features hip and disillusioned black kids and sharp political commentary.
In a recent strip, one character compares the post-election Republicans to Bill Gates, the Democrats ("they'll continue to offer token resistance, but I think it's over for them") to the Macintosh, and Barrack Obama - the inspirational black senator from Illinois who spoke at the Democratic National Convention - to the iPod: "He's like the iPod - clever, but not enough."
While iPods have boosted Apple's revenue to $2.35 billion last quarter - a 37 per cent increase on the same quarter last year - that enthusiasm has not yet translated into sales of Apple's flagship Mac computers.
Will there be a knock-on effect? Apple is certainly marketing its computers on the hopes that there will be, with the new flat-screen iMac's side profile echoing the iPod's profile in marketing photos.
Still, the iPod is massively outselling Macs - where Apple sold two million iPods last quarter, it only shipped 836,000 Macs. Analyst IDC still pegs Apple's overall computer market share at just 2 per cent.
Many analysts believe the iPod "halo effect" is only starting to kick in for Macs. A recent Piper Jaffray survey of 200 iPod users found that 7 per cent were PC users who planned to buy a Mac in the coming year, and another 6 per cent had already moved to Macs. Some 7 per cent said they already owned a Mac and would buy another.
Apple claims that 40 to 50 per cent of iMac purchasers are either first-time computer purchasers or former PC owners.
Will that increase? If the halo effect is real, it should.
For a niche computer manufacturer like Apple, 2 per cent of what is generally a high-margin market for the company is comfortable, but getting that share back up to 3 or 4 per cent would be delightful news indeed.
