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SAN FRANCISCO—Apple
Inc. had an incredible 2007. It launched the iPhone, saw
a huge uptick in Macintosh computers sales and enjoyed
the near doubling of its stock price.
As
people flock to the annual Macworld Conference & Expo
here this week, one thing is less clear: How will Apple,
which has become the “It” company of digital life, top
last year?
That
question will be answered in part Tuesday, when Apple
chief executive Steve Jobs takes the stage at the
Moscone Center for one of his highly anticipated
Macworld keynote speeches. He is expected to explain his
vision for the company’s future and introduce new
products and services, including online movie rentals
through the iTunes Music Store.
Over the
years, Apple’s health has been reflected by attendance
at Macworld, which is produced by IDG World Expo Corp.
For this year’s show, the 24th, vital signs are good.
More than 50,000 people are expected to attend, 10,000
more than last year. The number of exhibitors has jumped
20 percent to 475, and, for the second year in a row,
organizers are tapping space in a second conference
hall.
Exhibitors showing off Macintosh-related accessories
include such Apple competitors as Microsoft Corp.,
Hewlett-Packard Co. and IBM Corp.
Clearly
these are the gravy days for the Cupertino company. But
industry analysts say its growth is expected to slow
this year, in part because of concerns about the
economy’s effect on consumer spending.
After
soaring to a record closing price of $199.83 on December
28, Apple’s stock has dropped 13.6 percent, ending
Friday at $172.69. Some wonder whether Apple has peaked.
“It’s
one of those companies that keeps going up, and people
say it shouldn’t, and it keeps going,” said Steve Hach,
a senior analyst at ValuEngine Inc., a stock research
company in Princeton, New Jersey. “There’s intangible
things going on that are tough to get a handle on. It
could be that people love their iPods and think, ‘I
better buy that stock.’”
Apple
doubters say the company’s competitors have become more
savvy. Competing music and video players cheaper than
the iPod are more widely available, and the
entertainment industry is actively helping iTunes’
competitors by selling music and videos via Amazon.com
Inc. and other online stores.
And
although Macintosh sales have taken off, HP and Dell
Inc. have taken note, jazzing up their computers for
consumers.
“Apple
benefited in the past because [rivals] were not so
focused on the consumer,” said Tavis McCourt, an analyst
at Morgan Keegan & Co., an investment banking firm in
Memphis,
Tennessee.
Others
say the company is merely catching its breath before
another enormous growth spurt. The Macintosh computer,
whose market share is less than 5-percent globally, has
room to grow in international markets, as does the
iPhone, which was introduced at last year’s Macworld and
commands less than 1 percent of the US cell- phone
market.
Apple is
expected to continue its effort to become the gateway of
digital entertainment.
Jobs is
expected to announce a new movie-rental service Tuesday.
A number of major studios—including Walt Disney Studios,
20th Century Fox, Paramount Pictures and Warner
Bros.—have signed up for the digital video-on-demand
service through the iTunes store, which will offer
30-day rentals for prices ranging from $2.99 for older
films to $5 for high-definition movies, according to
people familiar with the plans. Viewers will have 24
hours to watch the film once it has been started.
The
service is expected to enhance sales of the AppleTV
set-top box, which serves as a bridge between the
computer and the living room TV. Adoption of the device
has been slow, in part because only one major Hollywood
studio, Disney, allows Apple to sell digital versions of
new releases the same day the movies are released on
DVD.
Apple’s
business model is now based primarily on selling
computers and devices. But if it adds movie rentals, the
company might change itself into more of a service
company, said Andy Hargreaves, senior research analyst
at Pacific Crest Securities. That could make it an even
bigger player in the media world as people receive more
of their entertainment digitally.
The
Apple faithful flocking to Macworld will be looking for
more signs of what’s to come, said Paul Kent, the show’s
general manager. “People always ask the question, ‘How
they are going to top themselves?’” he said. “But here
it’s always asked knowing that they will.” |
