To depict Apple’s extraordinary growth over the past 6 years as a revival is to understate the truth. Apple is not just revived, but energetic, ambitious and kicking ass. At no time in its history did Apple achieve the success or momentum that it now has. But how long is this likely to continue?

The Origins of Success

Apple drove innovation in the early years of the PC market and was universally admired for it. But its ground-breaking products delivered neither a defensible share of the PC market nor a firm financial foundation. Apple was unorthodox, unruly and almost ungovernable. CEO John Sculley, who had been drafted in to solve that problem, sacrificed Steve Jobs in a fit of corporate insanity. Having banished the goose that laid the golden eggs, Apple entered a period of graceful decline and Microsoft took off like a rocket.

The golden goose returned from exile in 1996, just before Apple adopted the advertising slogan “Think Different” and he began to demonstrate what that slogan meant. The first noticeable change that Steve Jobs made (if you remember) was to manufacture Apple Macs and Apple laptops in different colors. The move was derided by no less an industry expert than Bill Gates, but it was actually the first maneuver in a long campaign to truly differentiate the Mac and establish it as the ultimate consumer computer .

Steve Jobs understood that the PC of 1997, just like the PC of 2008 was not a consumer device at all. No computer company had ever designed a PC for the consumer and, remarkably, no company had ever seen the need to. In fact the whole of the PC industry had adopted a structure that defeated attempts to pursue such a goal. Microsoft had a lock on the component that best enabled innovation – the GUI. You can have any PC you want as long as it’s Windows.

So Jobs designed and implemented a different product for a different set of buyers, using what he had at hand. Apple was thinking different in a big way, but it took a long time for anyone to understand what was going down. When the iPod was launched it was roundly hammered by loyal Apple fans. Peruse Why the iPod will fail – a MacRumors forum thread from 2001 to get a flavor of this. I particularly like the comment “Great, just what the world needs, another freaking MP3 player.” And indeed that’s all it was, another freaking MP3 player that established a $6 billion revenue stream.

Few commentators got it when Apple began opening Apple Stores. Read Commentary: Sorry, Steve: Here’s Why Apple Stores Won’t Work for a convincing explanation of why it’s a crazy idea. I particularly appreciate the wisdom of David A. Goldstein, president of researcher Channel Marketing Corp in that article.

Since PC retailing gross margins are normally 10% or less, Apple would have to sell $12 million a year per store to pay for the space. Gateway does about $8 million annually at each of its Country Stores. Then there’s the cost of construction, hiring experienced staff. “I give them two years before they’re turning out the lights on a very painful and expensive mistake,” says Goldstein.

Apple started the Apple Stores because it saw that its retailers were doing a poor job of showcasing the Mac. So Apple hired a seasoned retail executive, Ron Johnson, formerly with Target Corp., to build a retail strategy. It worked. Apple Stores constitute the most successful retail chain launched since Wal Mart. Apple now has a sure fire method for growing its revenue. It just opens new Apple Stores in new areas and new customers appear.

The Net Net

Jobs introduced highly differentiated products into a commodity market.

Many commentators view Apple’s dynamic commercial success through the success of the iPod or the iPhone, expressing vague disappointment with the Apple TV and some disdain for the “bread and butter” business of computers. I prefer to take the opposite view. There can be little doubt that the iPod gave Apple the impetus it needed to re-establish its credibility, but it was and is the iMac that is the foundation of the business. The iMac is the platform from which other products spring. It gave birth to the iPod via the iTunes player and it gave birth to the iPhone via OS X. Eventually it will give birth to an Apple TV that people actually want.

Jobs gave the Mac a complete makeover. First the operating system was swapped out, with OS X being based primarily on what was good in Jobs’ NeXT computer, then the hardware was revised by swapping out IBM’s Power processor for Intel’s line of processors – not because the Power chip was deficient, but to allow the iMac to be compared directly with PCs.

This makeover has given Apple dominance of the PC market and this dominance is starting to show.

In the posting Apple’s Market Share Is Bigger Than You Think, I showed, in various ways, that Apple’s market share as expressed in global or even simple US figures is highly misleading. It’s a lot bigger than you think. The latest quarterly figures from Gartner, by the way, suggest that Apple now has about 6.5% of the US market by units. Its market share just continues to grow and grow. Its share of the world market would be 6.5% too, if it had Apple Stores in countries across the world and it will in time. Apple’s iMac sales have been growing at 30% or more for at least a couple of years – and now its beginning to show up in a big way. In its latest quarterly returns, the growth rate is actually 51%. The rate of growth is growing!

When Apple’s iMac sales are gathered up with PC sales, it creates a misleading impression. Consider this table showing US sales in thousands for the first quarter this year and the same quarter last year (as estimated by Gartner):

Notice that if you take Apple out of the equation, the PC market in the US is barely growing (at an anemic rate of 1.4%) but Apple is growing at over 30%. The market as a whole seems to be growing at 3% – but more than half of that growth is attributable entirely to Apple. If you focused on the consumer market alone, the disparity would be greater. PC sales would be declining.

Now reflect on the fact that Apple reported 51% growth in PC units in its quarterly figures. Gartner’s figures are way off the mark and Apple’s figures account for an even higher share of the growth of the whole market. The initiative belongs to Apple, and there’s little that the competition can do about it, because they are not selling the same product.