Apple is beginning to look like it is going to fulfill its commercial potential. All the signs are there. The Apple stock price rose by over 200 percent in 2004 and in its final quarter its revenues rose to $3.5 billion giving it a run rate of $14 billion. The run rate may be a little misleading because the final quarter revenues were boosted by sales of 4.6 million iPods, which is a Christmas peak. Nevertheless, Apple is clearly outperforming all consumer electronics stocks by a dramatic margin – and Apple isn’t just a consumer electronics company, although its financial vitality comes primarily from that market.

Apple has achieved many things in recent years, but perhaps the most surprising is that it has defined and plays a central role in the digital music market, with the twin successes if its iTunes store and the iPod. The iPod is a phenomenon that no-one saw coming. Apple hasn’t just done a great piece of marketing and design work, it has established a very powerful brand. One that must be the envy of many. It is also generating significant revenues, and one analyst organization, Generator Solutions Ltd, is predicting that Apple’s music revenues will reach US$6 billion by 2007.

However, Apple isn’t just doing well in this fashion driven market. IDC reported 25 percent growth in its worldwide shipments of PCs (compared to 13.7 percent for the market as a whole) and the success of the iPod looks to be stimulating sales. The iPod is an invitation to use the Apple PC as a media center.

Apple’s recent announcement of the iPod Shuffle, which is a music memory stick and player aimed at the low end of the music player market and its Apple PC in a box, the Minimac, may not have set the world alight with enthusiasm – some observers were hoping for something a little more revolutionary from Steve Jobs this year, but they both make eminent sense as products. If the MiniMac proves to be a success, and it’ll be a while before we know, then Apple will have finally gained entry to the mass PC market – a market it had previously chosen to price itself out of.

The point is that Apple clearly intends to play in the mass PC market and it now has the foundation and a product with which to do that.
The differentiating features of the Mac, in case you’ve never used one, are:

1. It doesn’t crash, it’s highly secure and fairly bullet-proof against PC pests (viruses, spam, hacking etc.). This all adds up to “trouble free”.
2. It’s the definitive digital juke box.
3. It’s the premier digital photography platform
4. It is likely to become the definitive digital video platform. (it’s a little early to pronounce on this).
5. Good lap top PCs
6. Ease-of-use (in many ways superior to the competition)
7. Microsoft compatibility is good (this had always been a problem for years).
8. Good networking (happily networks with Windows PCs)

If you read this list, it clearly indicates an uncompromised consumer emphasis, but the PC market, which really ought not to mix the home with the business, has never managed to separate the two. Vendors do little to try to specialize devices for the home or the office, apart from the software that comes loaded. It therefore seems possible that, with Apple’s visible resurgence, we are going to see an uptake of Apple PCs in businesses beyond its established niches (for DTP, Photography, Video, etc.). If that happens it will be because of the first differentiator listed above: “trouble free”.