It's a paradigm shift at the company," says Charles Wolf, an analyst at investment firm Needham & Co. and a longtime Apple watcher (who owns shares of Apple stock). "They are redefining what kind of company they are." Indeed, the release of iPod for Windows last August established the demarcation line in an extraordinary strategic change for Apple, a company that over the past two decades has steadfastly refused to loosen its control over the creation, manufacturing, or distribution of its products.
Years after Apple launched its advertising campaign admonishing customers to "Think Different," CEO Steve Jobs appear to be taking his own advice. Instead of resigning himself to the idea that Apple will never be more than a niche PC supplier, Jobs is slowly transforming it into a high-end consumer-electronics and services company � la Sony (SNE ) — one that he hopes ultimately will be less dependent on sales of the Macintosh PC, which now account for about 80% of revenues.
If this continues, watch out – this may be a company with explosive growth. Apple has been an idea factory for years, but has not been able to turn those ideas into products consumers want to buy. Now that is changing. As Apple's sales improve, net income should rise significantly, since Apple has great margins.
"Apple's gross margins are the envy of the industry," says IDC analyst Roger Kay. "But below the line, they give it all back. They pour money into R&D and [selling, general, and administrative expenses]. They have expensive retail locations and high-end advertising. It's a Cadillac operation."
As consumers become more familiar with Apple products, it may open them up to buying Apple computers. This is definitely one company to watch.