Customer Value- Apple Inc.

How orchard apple tree Can Keep Its Value By Saul Hansell Its official. Apple is the most valuable computer nobleman in the world. In the wake of the companys better than expected earnings in the quarter ended Sept. 30, Apples shares rose by nearly 7 percent, making the companys total market value $162 billion. That edges pop out I. B. M. , which is cost $155 billion. Apple also surged past Intel, worth $156 billion, and no(prenominal)ia, the most valuable cellphone maker, which is worth $150 billion.Indeed, Apple is now the fourth most valuable technology company, after Cisco ($189 billion), Google ($208 billion), and Microsoft ($290 billion). picApples bear Apple, interestingly, has something in common with these other companies. They all draw their power from software. Microsoft sells software in a box. Google delivers software online. Cisco, like Apple, delivers software embedded in devices, which it generally contracts to others to make. But there is a pick up difference, too. The other three have established sovereign positions in their markets, which fends off rivals and keeps margins high.Apple is a distant No. 3 in PCs. It dominates personal music players, but it has a much more modest share if you define the consumer electronics market more broadly. Still, Apple maintains margins finished a combination of innovation and marketing that leads consumers to prefer its brand. Thats a great achievement, but it is harder to maintain that edge than an operating- system of rules monopoly. For an investor, one question is whether Apple batch capitalize on its momentum to catapult itself to a business that doesnt depend so much on each successive product introduction.To do so, Apple go forth increasingly find itself battling with the three other companies at the top of the tech totem pole. Microsoft, of course, thought that it had defeated Apple in the operating system a decade ago, only to find its rival has revived, stronger than ever. If the battle of the future is server-based applications delivered on browsers, the battle pits Microsoft, Apple, Google and the collective forces of open-source software against one another. In that world, Apple has some choices to make Will its iLife and iWork applications move onto the Web?More importantly, will it compete in the mass business PC market, where the C. I. O. of an insurance company buys desktops by the truckload? Price is more important than styling there. Steve Jobs hasnt liked commodity businesses. He said he didnt want to do a deal with a cellphone carrier either, but he found a way to hold his nose and cut a rather advantageous deal with AT&T. So who knows if he will go after Microsofts corporate market? A safer bet is that the real rivalry will be mingled with Windows and some form of Linux, with Hewlett-Packard and Dell, the No. and No. 2 PC makers, building machines of both flavors and Cisco making the routers. The other, perhaps bigger, battle is over who will break th e world of connected entertainment and communications. The iPod begat the iPhone and Apple TV, of course. But Microsoft has been working on media and cellphone software for a decade. And Google is shaping up to be a key player in cellphone software, video distribution, and any other service or device on which it can display advertising.That brings us to Cisco, which wants to get out more and have some fun. It bought several social networks, as well as Linksys, the home network company, and Scientific Atlanta, the cable set-top-box company. Now it has declared that it will develop an entertainment operating system. No one knows what an entertainment operating system is. But I suspect that if Apple can become the dominant player in that market, it has the best chance to keep its position as one of the most valuable technology companies in the world.