Getting Played by Apple
When it comes to allowing other companies to share in the popularity of its iPod music players, what Apple Computer (AAPL) giveth, it also can taketh away.
That point was made particularly clear last week, when
(PLAY) announced that Apple had decided
In response, PortalPlayer's stock bled 45% of its value in two days.
PortalPlayer's dependence on Apple was extreme: About 95% of the company's sales are iPod-related. But the small chipmaker is only one of many companies that have attempted to cash in on the iPod phenomenon.While there's considerable money to be made doing so, as PortalPlayer has demonstrated, there's also a lot of danger, too. "It is risky when you've got a vendor as dominant as Apple is, and you've tied your future to that vendor," says Rob Enderle, principal analyst at the Enderle Group, a technology consulting firm. Other technology companies have had products whose dominance approximated that of the iPod or whose market strength was more powerful than Apple's, analysts say. But Apple has long had a contentious relationship with many of its partners, says Roger Kay, founder and analyst at the consultancy Endpoint Technologies. The company has been unapologetic about directly competing against some of those partners or cutting off relationships with little warning, he says. "When doing business with Apple, be aware that your risk is probably higher than doing business with other people in the industry," says Kay. An Apple representative did not return a call seeking comment about the company's relationships with vendors and partners. Apple has had marked success with the iPod. Although sales of the device in the company's
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV