Apple's strategy for 2006

Ever since the beginning of the year the tech industry has been obsessed with Apple's strategy for 2006. The media and industry pundits have been speculating like mad. No company other than perhaps Google has come under such a spotlight. Steve Jobs must be having a ball.

So as the dust settles on Jobs announcements yesterday at Macworld we thought it was time to look at the reality of what Apple plans to do for 2006 now that most of their product cats are out of the bag.

Our view is that at Apple 2006 is a year of execution. I.e drive the products that they designed last year through the market as far and as hard as possible. The fact that Jobs started his keynote telling us about the impressive performance and financial metrics achieved at the end of 2005 tells us that he has enough evidence to believe that his startegy works.

And Apple's strategy at the high level is quite simple. Dominate the music player market through the iPod for as long as possible and keep his package (iPod + iTunes) proprietary for as long as possible. Then use the music player to become the default hi-fi sytem for the home and then get that to hook into some Mac device that acts as a media center. So, that's the first half of the strategy.

The second half is all about the Mac. The Mac business is the legacy business at Apple and for as long as Steve Jobs has returned to Apple as their leader he has been taking the Mac through a classic turnaround. Now that the turnaround is complete he is going after market share again. Apple only has a paltry 3% of the PC market. His Intel strategy is about growing that. And his iLife suite is about further differentiating his computers from Windows computers. The Apple computer for the multimedia broadband age and the Windows computer for utility and office computing.

And his end game may even be to offer the ultimate hybrid device that runs both the Windows O/S and the Mac O/S. So, for utility and office apps fire up Windows and for multimedia entertainment and apps switch over to the Mac O/S. With Intel chips in the Mac all Jobs has to do is license Windows from Microsoft and he's off. This one move could boost Apple's share of the PC market into the double digits.

And if Apple continues to lead the market for digital music players, which shouldn't be too hard at least for 2006 thanks to their cool factor and lack of real competition, and if Apple grows their PC market share by 1 percentage point per annum, they will have no problem driving sizeable top line growth. They don't need an Apple TV or an iPod mobile phone to help them get there. Though they may want them for future growth, but that's another story.