The Transformation of Apple's Business Model

So it's not like we're having to cross the river to go somewhere else; the other side of the river is coming to us." From being a manufacturer of PCs, Apple has slowly moved on to consumer devices. Analysts say the transition has been smooth. After the release of iPod, Apple ceased to be a hardware/software manufacturer - it stepped into the domain of consumer electronics. With the launch of iTunes Music Store, Apple became a media company. Richard Doherty, Analyst, Envisioneering Group said, "In the consumer electronics world, there's always talk now about Apple, the way people used to talk about Sony. At the water cooler or in board rooms, they're asking, 'What is Apple doing next?' or 'How do we stay out of their way?'"

According to IDC, Apple's share in the US PC market was 4% in the first half of 2005, after being in the 2.5% to 3.7% range for several years. Of the total 4.5 million computers Apple sold in 2005; one million were to Windows users who had switched over to Mac. Analysts cited the 'halo effect' created by iPod as one of the reasons for the switchover. According to Charlie Wolf, Analyst, Needham & Company, "The strength of Apple's performance in 2006 will depend on how well they convert Windows users to the Mac." Apple could not leverage the early lead it had generated in the PC business by keeping the operating system proprietary. This gave Microsoft and Intel the opportunity to go forward and capture market share...