I think was a poor article.

The article feels as if it were written four years ago, speaking of huge margins and the art of hardware.

The whole industry now understands that the secret of Apple's success is software and hardware integration and hyper-user-centric design. You Mom can use SMS on the iPhone, etc.

But Apple is very, very vulnerable, and I can't believe that pundits, competitors, and haters alike have not figured this out.

The Achiliest Heal of Apple is quality.

No, not design quality. But manufacturing and software bug quality.

To determine a company's trend, look to the mavens. Apple's mavens now study build numbers, iPhone screen versions, etc., because Apple can't get things "right" out of the gate.

Something is definitely wrong with Apple's quality, beyond typical manufacturing defect rates. The MSM hasn't figured this out, but they soon will.

If I were Microsoft, I would start positioning Apple as the Jaguar of the computer space. Beautiful in the showroom, a train wreck in your garage.

(Of course, Microsoft can't do that positioning themselves since their quality is beyond terrible also.)

It's a well written piece which misses a couple of key points:

1 - Succession risk. There is no replacement for Jobs, not even a plan for one. Compare that to the competition's deep benches of executive talent. A mere rumor of another cancer scare and you can say goodbye to a big piece of the market capitalization.

2 - Leopard may be selling well but it's a flawed product. The key component 'Time Machine' is faulty and unusable for serious back-ups. It smells more like Vista than Tiger - lots of glitz, does not work as it should.

3 - Quality - see Robert Walet's comment above. It's going down. As an exclusive user of Apple products for five years my last two - a MacBook and an Airport router - both had to be returned for repair or replacement. A new experience for me after some 20 Apple purchases, and doubtless not statistically significant, but a data point for this user all the same.

4 - Sector. Here's the key. Apple is not a computer company or a technology company from the perspective of market risk. It's a consumer durable business. No one needs a new Apple computer. And, as the consumer continues to cut discretionary spending into the recession, where does that leave the ultimate consumer gee-gaw gadgets from Apple?

AAPL has delivered tremendous value this past year but the P/E and hype sorrounding the stock are both overheated. I sold my position in October at $183 at a substantial profit, a level the stock has struggled to exceed since. There are better places for one's money in a recession.

Nicely put, thomas. Lucid and well-reasoned

The article lost credibility with me pretty early. In the 8th paragraph (discussion of Apples' closed system), Pennenberg states:

"He [Jobs] won't allow music and videos downloaded from iTunes to be played on other MP3 players. (1)

"He won't permit music downloaded from competing stores to play on the iPod. (2)

"And in enforcing his exclusive deal with AT&T for the iPhone, he went so far as to disable or "brick" the device of anyone who dared "jailbreak" it for use with another carrier, or who downloaded third-party applications for features Apple hadn't built in. (3)

1). The facts are that EMI DRM-free songs purchased from iTunes can be played on at least one other MP3 player, the Zune. This is discussed in multiple places on the Net, so it is hard to believe the author doesn't know this.

2). Virtually any convertor will produce an MP3 of a song without regard to its origin. That MP3 can then be played on the iPod. 11 year old boys know this.

3). Speaking from personal experience, I had several third-party apps on my iPhone when I upgraded to 1.1.1 and it didn't brick me. Reports of bricking were limited to those that had jail-breaked (altered system libraries) their phones for purposes of changing he carrier lockin (or simple curiosity). For phones with only third-party apps (i.e. not jail-breaked systems), the only adverse effect was the loss of the apps. The phone itself worked flawlessly after the upgrade.

I'll read the rest of the article in a bit, but these *easily* refuted points make me question the level of care with which the entire article was researched.

More thoughts about Apple...

I own a bit of Apple gear (three iPods, two Mac-minis, one PowerBook, one MacBook Pro, an iMac, an iPhone and an Airport... plus wireless mice & keyboards for all of it) . I'm in agreement w/ both @robert & @thomas. Apple's quality has gone down. Case in point:

- Brand new MacBook Pro with a *horribly* squeaky space bar
- Leopard is buggy. I've had to restart the MBP more times since Leopard than the whole time I had Tiger on the same box
- My Powerbook's sleep function is so jacked up (after two years of OSX updates, it simply no longer functioned reliably) that I was unable to use it.

So far, though (knock on Ed Zander's head), no quality issues with the iPhone.

I think that more constructive criticism is needed in order to push Apple -and all the other computer and software companies- to better products and quality.
If they are the Kings of Cool and they only have Yes-Steve men and women around them, then when they will need to improve?