Apple goes from Rags to Riches in Just Eight Years

This afternoon, I searched the CNET archives to see if I had written something about Apple launching iTunes in January 2001. Hey, it’s the 10th anniversary. But another story caught my attention: “Merrill Lynch to Apple Investors: Sell“, from Jan. 7, 2003. On the eve of Macworld, with Apple shares at $14.85, analyst Michael Hillmeyer reinstated Apple coverage with “sell”.

“Although Apple makes great products, in our view the new product pipeline looks skimpy and we expect continued market share losses”, Hillmeyer wrote in a note to investors. “A product differentiation strategy is difficult in a business increasingly commoditizing”. 

What “skimpy” products did Apple announce? These: 12-inch and 17-inch PowerBooks, Keynote presentation program, Safari web browser, and iLife. Yeah, they all sure were skimpy: Mobile Safari ships on millions of iPhones and its WebKit engine powers some other major-developer browsers, like Google’s Chrome. As for iLife, many US journalism schools require incoming freshmen to use Macs, because of the digital media suite. If that’s measure of skimpy, how would Hillmeyer define robust? Geez.

I can’t resist throwing this out: How did people live blog in the dark ages of January 2003? In researching those, ah, “skimpy” announcements, I came across this Jan. 8, 2003 blog post by Adam Tow about Macworld 2003: “I saw the keynote address at the Apple Store in Palo Alto. Using nBlog, my Newton, and the store’s public Airport network, I was able to update my weblog with up-to-the-second updates during Jobs’ keynote. Sure a keyboard and laptop is faster, but what’s cool[er] than using a handheld computer?”

nBlog was a blogging application for Newton. As for Tow, he now is a digital media producer for All Things Digital.

Since I’m doing historical trivia, about two months before Hillmeyer’s sell recommendation and Macworld 2003, Microsoft and 20 partners officially launched Tablet PC, at Comdex, on Nov. 7, 2002. Gartner and IDC both issued gloomy first-year Tablet PC sales estimates. As usual, the analysts got it wrong. Tablet PC did even worse, proving to be a non-starter for the remainder of the decade.

Apple got the category moving last year with iPad (minus the stylus), with two (I presume three, but data isn’t available yet) quarters of strong sales. This year’s Consumer Electronics Show was tablet central with seemingly everyone owning a manufacturing plant or having the capital to outsource one displaying an iPad wannabe.

It’s a strange juxtaposition. Microsoft was king of the computing world in January 2003, with big developer and manufacturer support for Tablet PC (“Hey, it’s from Microsoft. How can it fail?”). Eight years later, everyone (Microsoft included) is chasing iPad from Apple, which seemingly sits atop the computing world’s throne. Well, at least measured by blogger, customer, and journalist enthusiasm. Of course, Apple gets way more press than it deserves. But I’ve written that story several times already.

As for other changes in fortunes, Apple shares reached a new 52-week high of $343.23 earlier today. I have to ask, were you sucker enough to heed Hillmeyer’s advice and sell those Apple shares in January 2003 for 14 bucks?

Editor’s Note: A version of this story appears on BetaNews.