Despite massive iPod-driven profits, Apple's core business is not music nor music players – and the company will forget that at its peril, Business Week warns.
Despite the positive effect of Apple's recent financial results on its share price – which rose to a 45-week high of $29.50 – the Business Week report advices Apple that " a little perspective is in order".
It continues: "It's hard to imagine the iPod ever becoming Apple's real revenue engine, partly because so many other parts of its revenue generation are tied to computer sales – monitors, AirPort wireless-networking stations, Mac OS X software, the .Mac service.
"The sales of these peripheral products and services combined actually rival the iPod in terms of total revenues."
Business Week suggests that despite being in poll-position in the digital-music race "Mac sales really need a lift", adding that "there's a simple way to do this: cut prices. Consumers still see Macs as the most expensive PCs around".
The article continues: "Apple needs to learn that price is determined by market demand and not its own perception of what products are worth. Its prospects look brighter now than at any point in recent memory, and it still boasts some of the fattest margins – if not the fattest – in the business for its PCs.
"Jobs has the tools to really turn Apple into a mainstream player if they can boost computers sales by dropping prices. Apple has the cash to reward shareholders with dividends. And it can easily afford to own up to stock-options expensing. It's up to the board of directors to perform the reality check necessary to shore up Apple's future," concludes the report.