Business Week correspondent Charles Haddad takes a look at Apple's business strategy in this week's Byte of the Apple column.
He stresses that, although in the past faster processor speeds stimulated sales, speed no longer drives the market: "Today's PC users find such velocity superfluous, since their old machines can handle most common tasks."
He adds: “It's a major change in the way the market works, and is part of the cause for continued slowness in the IT industry. It's the death of the business model that drove the industry for the past 20 years."
The industry is no longer experiencing year-upon-year double-digit sales growth, says Haddad. He praises Apple CEO Steve Jobs for "seeing this shift before anyone else." Haddad believes Jobs' focus on the digital hub two years ago was a sign of his recognition that consumers no longer “lust after PCs".
To create growth opportunities, Microsoft has extended its business into peripheral products and consumer entertainment devices.
Similarly, Apple has produced its iPod MP3 player – and rumours claim a jointly developed Palm/Apple product is to come. Apple also continues to redefine its core hardware products through aggressive marketing.
It's an attempt to extend the industry envelope, Haddad believes. "They're hunting for something that geeks will feel they cannot live without", he says. "They’re after the digital equivalent of the Holy Grail."