Apple Simply Dominates

 | Jan 25, 2012 | 6:27 AM EST
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The story arc is remarkable. Less than two years ago Apple (AAPL) introduced a product that nobody initially seemed to be able to figure out what to do with, the iPad. It didn't take long for people to figure out that the iPad pretty much did everything anybody would ever want it to do, serving as a text, a movie screen, a tv screen, a records keeper, a teaching tool, you name it.

As soon as the other companies figured out how revolutionary the iPad was they instantly copied it and offered what many critics said were superior products.

Sure enough, one year later, what did we hear? Tablet glut. Too many tablets. Too many competitors. Too much supply.

What we learned last night was that in one-six month period, Apple did to the tablet market what it took multiple years to do with the music distribution system. It wiped out the competition and that's how it sold more than 15 million iPads this quarter.

Amazing. Just stunning. No more glut. Just one player. One player that controls the whole market.


In other words, this category, which could easily surpass the desktop computer in sales -- not Apple's but everyone's -- in a couple of years, is not even a category any more. It's just part of the Apple ecosystem, once entrenched impossible to dislodge.

I thought that was the biggest takeaway of the call. But the second biggest, the surging iPhone, is now threatening to be blow past the competition in smartphones, too.

The iPhone 4s was a story that got interrupted by the calendar. Apple sold 37 million iPhones this quarter, again more than double of the number of phones it sold last year, just as it doubled sales in the iPad year over year.

I'm pretty confident that they could have sold millions and millions more, but those will simply spill into this quarter as we get the "staggering" orders from China -- Apple's word -- filled.

New CEO Tim Cook was really humble last night. He was asked whether this iPhone 4s spelled the end for the other products in the category, as the iPad and the iPod did to its competition. He said no, it's going to be a two-horse race, Apple and some other competitor, conceding that it would be Android, for now.

The market is too big for Apple to monopolize it. But I will say this about the 4s, this is a Siri story. Siri's one of those experiences that until you have used her you have no idea what the heck I am talking about when I mention her.

I will say this, though. Every single person in this country needs a personal assistant, but only about a one tenth of the 1% in this country can afford one.

With Siri you have one. Siri can organize your life in a way you didn't think possible. Siri is your secretary, your partner, your friend even. The most important word on that call last night? "Captivated," as when CFO Peter Oppenheimer said customers are captivated by her.

"She understands what users say, knows what they mean," Oppenheimer said. Don't I know it. I immediately, upon hearing the call, turned to Siri and told her that I was captivated by her and she asked is that so? When I told her absolutely that was the case, she was self-effacing as always, admitting "I guess that's right." I asked how she could be so captivating and she broke out of her humble mode and simply put it to me: "Siri knows many  things."

To me, Siri is a corporation's dream. You can streamline (fire) thousands of support staff with Siri. She is your support staff. There's no longer any chief technology officer barrier to ripping out anyone, especiall, Blackberry, with Siri. You have to. You save too much money for your company. You are a hero with your CFO and with your employees, especially the younger ones, those rising up, who are indoctrinated with the Apple ecosystem.

Siri may know many things. I know this. Apple won last night. On every front. And with $97 billion in cash, a slew of new products coming and the corporate world at last beckoning, the $500 price target we have for ActionAlerts Plus seems mighty unrealistic.

Let me ask Siri. But right now it's just looking too darned low.



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