“A thousand songs in your pocket,” advertised Apple, when it introduced the iPod back in 2001. Today, that claim seems almost quaint. Last week Apple released its latest iPod lineup, including a new Nano with more than three times the memory of the original, a fraction of the weight, plus motion sensors and colour video screen—all for a price starting at US$149, compared to US$400 for that first iPod.
Sounds like an impressive advance, but in the finicky world of investor expectations, Apple’s latest unveiling was a flop. Apple shares fell almost four per cent on the day of the announcement. Never mind the news that iPod now has a 73 per cent market shareanalysts were ho-hum. Mike Abramsky of RBC Capital Markets called the new iPods an “evolutionary, not revolutionary” step. Nobody was flat-out disappointed, but most agreed Apple needs to lower prices even faster if it hopes to keep driving big sales and rejuvenate a stock price that has declined by almost 20 per cent this year.
The industry’s yawn underscored Apple’s big challenge. Year after year CEO Steve Jobs theatrically doles out groundbreaking products like rabbits out of a hat, from the Shuffle to the iPhone. Investors expect more of the same, but meeting those big expectations is becoming near impossible. Complicating matters is Jobs’s own health. He is an integral part of the Apple brand, but his fragile appearance lately has raised concerns and is cited as one reason for Apple’s falling stock price.
At last week’s event, Jobs appeared on stage under a banner reading, “Rumours of my death are greatly exaggerated” (a nod to an accidental running of his obituary by Bloomberg last month). The same might be said of talk of trouble at Apple—greatly exaggerated, but like most rumours, hard to quash no matter how baseless. M
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