Don't Buy Apple's One-Trick iPhone Pony

Stated simply, over the past two years the sales growth in iPods and other music products was responsible for nearly 75% of Apple's incremental revenue of $11 billion (to a total company-wide sales figure of $19.2 billion last year).

In fact, if the iPod and other music businesses did not exist in the past two fiscal years, Apple's revenue would have only risen from $8.5 billion to $9.8 billion in 2006, a modest gain of 15%, and down from the 30% growth rate in 2005.

Before the iPod, Apple was essentially a stagnating personal computer company with modest market share. After the iPod, Apple's MacIntosh sales grew well in 2005 but that rate of growth dropped by a third in 2006.

Despite the protests of many, the iPhone has been hyped for at least the last 12 months as the next growth engine for Apple, intending to replace the iPod's significant contribution.

As someone wrote to me last night, without the iPhone's announcement "a stagnant or falling stock price combined with Jobs' involvement in the options backdating scandal would have made for a more hostile environment ... so it sure is a big help that Jobs can make an over-the-top iPhone announcement at MacWorld just two days before the press discloses further damning details of the options scandal. Without the iPhone announcement, MacWorld is a giant yawn ... so the iPhone is announced -- without even having the rights to the name -- months before it is ready to be shipped."