Business Week writes today that it believes Apple is transforming itself into a high-end consumer electronics and services company.

In a special report on the topic, the business magazine examines the fortunes of Apple's iPod, demand for which soared after the company launched its iTunes Music Store.

The report quotes veteran Apple analyst, Needham and Co's Charles Wolf, who said: 'It's a paradigm shift for the company. It is redefining what kind of company it is. Apple CEO Steve Jobs is not content with Apple becoming a high-end niche computer supplier, and is slowly transforming Apple into a high-end consumer-electronics and services company a la Sony – one he hopes ultimately will be less dependent on sales of the Macintosh PC, which now account for about 80 per cent of revenues."

The report follows the release of Apple's iLife applications, which form the focus of Apple's digital hub strategy. This culminated in the release of iPod and the iTunes Music Store.

iPod is available for Mac and Windows systems, and Apple plans to release a Windows version of iTunes, complete with Music Store support, before the end of 2003. Wolf calls this move "a shift in strategy".

Music move The magazine says that Apple's move into digital music combined its technological strengths with the powerful brand-awareness among musicians. A record label executive told Business Week: "Until Apple, it wasn't cool to buy digital music. This was about getting to that pivotal group of people – the people who buy the cool sneakers and wear the right clothes – and showing them that legally downloading music could be cooler than stealing it."

Business Week also spoke with O'Reilly & Associates founder Tim O'Reilly. he said: "Apple's move into digital services is astute. As software and services become more important Apple's move to leverage its brand and to bring simple, elegant software and services to the Windows world makes sense."

Business Week concludes: "Steve Jobs's promise to innovate through the downturn may turn out to be the right strategy – both for Apple and for its customers."