Taking Bites Out Of Apple

For the first time since Steve Jobs resumed top place at technology giant Apple Computers, the company is experiencing a round of investigations and lawsuits that are putting its equity price under pressure. In the past 12 months, Apple has gone from trading at just under $35 a share to a high of $85 in Juanuary, 2006. Most of this success has been as a result of Apple's deliberate self-styled re-invention from a software and computer manufacturer to a leading player in the music industry which has so far resulted in an unprecedented growth in sales of its iPod and iTunes brands.

Like many U.S. technology giants, however, Apple is beginning to find that success comes at a price. The first signs of trouble came from the technology community itself, with complaints about the inoperability of Apple's products with outside systems. There have been attempts to overcome this, with most recently a competition aimed at hackers to install Windows on Apple's Macintosh computer, which was cracked twice in less than 24 hours. French lawmakers recently voted overwhelmingly to force Apple to open its digital music format used by iPod and iTunes to competitors, a move that endangers the crucial franchise Apple holds over the disruptive technology: in a recent survey, over 80% of participants identified an MP3 player as an iPod first, rather than by its generic term or the brand names of any of its competitors' products.

Last month the European commission announced it was investigating Apple's pricing of music sold via its online music store, iTunes, alleging that price discrepancies between the U.K., Europe, and the United States may be unfair to those who are paying with British pounds. If legislation is passed as a result of the investigation, it is likely to have a wide-ranging impact on Apple's currently cushy pricing autonomy, which has enabled it so far to show profit growth significant to Wall Street analysts' and traders' evaluation of the company's stock.

Article Author: Daniel M. Harrison

Visit Daniel M. Harrison's author page — Daniel M. Harrison's Blog