For the foreseeable future, Apple (AAPL) Will Dominate the Home Computer Market –Rich Sage Analysis.

During the quarter Apple stock dipped to the $120’s, when I initiated a buy of the stock based on strong sales growth and a high discount at current prices, for my consulting services. Apple keeps gaining outstanding marketshare –taking away from Windows users and gaining many new fans. How many of you have decided to “Go Apple” instead of making a jump to Vista? I think there are droves of such switches, and it’s just the start. The current 8%+ market penetration is going to double in my opinion as Pentium powered iMacs and the latest OSX dazzle users.

More and more time at the computer is spent working on utilities that are driven online. The connected software model is taking over. Many of our badly needed applications are running on servers, from Google to blogging platforms to even our own servers.

The iPod generation is now turning on to more and more Apple products. I can see Apple’s market cap, which is near $100 Billion, reaching 3 times as the Apple innovation and marketing engine expand. Companies that are “firing on all cylinders” are the leaders when the market emerges from it’s correction that we are part of at this time. Apple fits this model perfectly. Sure it’s stock price has gone up several fold in 4 years. However, following this correction, where the price has dipped nearly forty percent, it’s a great time to “stock up on Apple” shares and options.

Let’s look at many of the trends that Apple is riding on in 2008.

Great, Easy to Use Products

Not only did Apple bring back the “cool” into product design, but they also managed to create very easy to use software to run the “whole show”. I can vouch for that in my own home where an iMac has run for 5 years without any overhaul, while I’ve had to install Windows XP over 6 times during the same time.  At my workplace, I use several pc’s to run everything because I know installing a lot of software on one will lead to severe problems very quickly.

Another clear indication that Apple is a leader is the amount of competitors that launch products just about every week with titles like “iPod Killer” or “iPhone Killer” and on and on.

There is no dispute that Apple is the industry leader and everyone else is catching up to their game.

Leadership

All this success is brought about by one person and his talent to motivate Apple Associates: Steve Jobs has to be given credit for taking the flat-lined Apple from a stock in the teens to several hundred dollars. The introduction of the iPod to iMacs have turned the company around clearly, and the leadership does not look like it will end anytime soon. It’s just getting better. Anyone care to venture what is next? iGame? I bet some iSomething is in the air at Apple and will continue the success of having 120 million plus iPods of various types sold, and turning many of those customers to life-long Apple consumers.

Uniform Platform that People are Comfortable Using

What started as a “penetration of the ears” with it’s iPods is turning into a full-fledged assault on the entire home, with a focus on the living room and entertainment.  Everything from AppleTV set top boxes to the iPOD Touch are basically very easy to use devices that don’t even come with a 100+page operations manual.  You just turn it on, and go!  If there is a question, there are basically dozen of user generated videos showing how and what to do.

Momentum

Where is all this going?  More and more innovation.  More and more value to the consumer.  And that’s all in the hardware part.  I have yet to really look at all the services Apple will deliver through all the “boxes” that attach via a computer, wi-fi and even cell signal to online services.  These online services will greatly help Apple maintain their market dominance through the rest of the decade!

This is the overwhelming reason for my decision to add Apple to my list of portfolio stocks: Apple is riding a wave of unstoppable momentum. The only reason the stock price has adjusted is because of the market sentiments –it has little or none to do with the fundamentals of the stock.  From time to time fund manages like to exercise their ‘flavor of the quarter’ weeding out a tech company.  For whatever reason, Apple that has had unbelievable success was hit with that sentiment over the past few months.

However, the numbers don’t justify it.  Their margins, their market penatration, and the execution of a business plan is steaming ahead full speed.  Apple is a BUY.

Rich Sage.