Market share

[Les Posen]

The discussion of apple's market share and how the Powerbook's might 
affect the bottom line have been interesting.

The following is a quote from a recent Motley Fool column - this is the 
writer's (a nom de plume) conclusion:


<<<<I'm more and more convinced that Apple should take massive 
($100M+/quarter) losses by flooding the market with affordable Mac 
hardware. If there are an additional 2 or 3 million Mac users out 
there, more software sales and more peripheral sales will follow. 
Adding new iApps won't increase the user base as surely as low prices.

If Apple loses $800M in cash over the course of 2 years but increase 
its user base back to 5% global market share, it would be worth it. 
Once users have been converted to the Mac, they have proved to be a 
very profitable installed base. Through the iTools/iApps program, Apple 
already knows what to expect when they increase prices on its user base 
- a substantial portion of people will pay for what was free.

So Apple, with its massive cash reserve, could afford to sell at a loss 
for 2 years and then jack prices up to return to profitability. The 
massive losses of 1996-1997 helped to pave the way for the profits of 
today by establishing the user base, which Apple is capitalizing on 
today. The stock price is already at rock bottom levels, and there was 
no problems with having it more than quadruple in 1999/2000 despite the 
fact that Apple's losses for '96-'97 nearly cancels out the profits for 
'99 -'00.

Apple needs to take the long-term view and stop thinking "If you build 
it, they will come" .>>>>


Full article is here: http://www.fool.com/community/pod/2003/030117.htm


Les