Customer Value- Apple Inc.

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How Apple Can Keep Its Value
By Saul Hansell
It’s official. Apple is the most valuable computer maker in the world. In the wake of the company’s better than expected earnings in the quarter ended Sept. 30, Apple’s shares rose by nearly 7 percent, making the company’s total market value $162 billion. That edges out I.B.M., which is worth $155 billion. Apple also surged past Intel, worth $156 billion, and Nokia, 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). [pic]Apple’s stock

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 largely contracts to others to make. But there is a key difference, too. The other three have established dominant 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 through a combination of innovation and marketing that leads consumers to prefer its brand. That’s a great achievement, but it is harder to maintain that edge than an operating-system monopoly. For an investor, one question is whether Apple can capitalize on its momentum to catapult itself to a business that doesn’t depend so much on each successive product introduction. To do so, Apple will 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...
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