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Analyst Sees Apple's Competitive Advantage as 'More Than Just Software'

by , 1:40 PM EST, January 3rd, 2006

American Technology Research analyst Shaw Wu on Tuesday issued a new research report in which he wrote: "We believe AAPL's competitive advantage is more than just software. It is the company's focus, vision, industrial design, and integrated approach with hardware, software, and service that help create its easy-to-use and best-selling products." He added that CEO Steve Jobs is instrumental in helping the company "maintain its position as an innovator and trend setter, not a follower."

Mr. Wu composed the report in response to Sony senior vice-president Tim Schaaff's desire to create a unified look and feel in the company's software. Mr. Schaaff used to be a vice-president at Apple, where he was in charge of QuickTime development. "While we view this as a potential positive for Sony and potential negative for AAPL," Mr. Wu wrote, "we believe unifying different software code from different hardware platforms from different regions, not to mention different ideas and conflicting agendas, may prove time-consuming and difficult to execute."

In comparison, QuickTime benefits from "its position as one of many industry standards (avi, mpg, mpeg, wmv, divx, etc.) for playing back and recording video," Mr. Wu explained. "We believe AAPL has been quietly de-emphasizing it as a proprietary technology with QuickTime 7 as it leads the industry to new emerging standards MPEG4 and H.264 for HD video."

In addition, Mr. Wu said, "it may be difficult for competitors to replicate AAPL's easy-to-use user interfaces without infringing on its patents. AAPL is known for its strong legal team and its patents not only cover technology but the "look and feel", interfaces, and methods as well."

Mr. Wu reiterated his "Buy" rating on Apple's stock, with a US$77 price target. He also maintained his December quarter forecast of $4.9 billion in revenue, $0.54 in EPS, and 9.7 million iPods sold.

At 1:41 PM EST on Tuesday afternoon, Apple shares were selling for $72.91, up 1.42% for the day.


If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

Observer Comments

Show: Subjects Only | Full Comments
Close Name:Tommo_UK Posts: 1212 Joined: 16 Mar 2005
Subject:

Go go Wong Way Wu... you've almost outlived your nickname - pwetty soon we'll have to call you Wight Way Wu

Close Name:Rainy Day Posts: 172 Joined: 07 Jun 2005
Subject: Almost

Tommo - Almost!

And speaking of “almost,” AAPL is almost $77 already. I expect by the close of next week, once Wallstreet has digested MWSF keynote, it’ll be there (and time again for Mr. Wu to raise his estimates… once again.) However pre-Q1 results announcement jitters might throw that off until the week following.

I wouldn’t be surprised to see AAPL push into the 80’s a little past mid-month. Gonna be another wild ride up this year for AAPL; more flat-ling or even the begin of the BIG dip for MSFT.

Close Name:Bosco Posts: 105 Joined: 03 Jun 2002
Subject: Rainy Day is an AAPL hater and a pessimist

I wouldn’t be surprised to see AAPL push into the 80’s a little past mid-month.

Typical AAPL hater talking down the stock. We all know it will be over $150 in two weeks, and over $300 by February. Are you short on it or something? Maybe you should disclose that before spreading FUD.

View Name:Guest
Subject: CAN IT BE THAT WU IS FINALLY GETTING A CLUE???
Close Name:macslut Posts: 20 Joined: 03 Sep 2004
Subject: I agreed, AAPL is set to dip

AAPL will dip in a couple of weeks due to not being able to meet the expectations both in terms of results and in terms of new products.

When it dips, it will be a good time to buy since investors will totally over react. The mid-term and long-term prospects for AAPL are incredible as they are firing on all cylinders and growing in all directions...BUT...people are expecting waaaaay too much to come out of MWSF.

Intel based Macs were supposed to come in around May, and here it is January and if they are announced they will *meet* expectations (not beat them, which increases stock price).

Plus the initial reviews will reflect pent up greed. The *expectation* (based on hype) is Intel iBooks @ $750. Apple would need to *beat* that to get a bump in stock. Apple might have Intel iBooks as low as $1,000 and they'll be a hit with consumers...which will be reflected in the stock price *after* the initial MWSF price dip.

The same can be said with iLife, iWork, new iPods, the Mac mini, and everything else everyone is expecting. Apple, through no fault of their own, can't possibly deliver on the buzz.

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