Dueling Fools: Mac

I'm biased in this Foolish war of words. I don't own an iPod. But I do own a MacBook Pro ... and a G4 PowerBook ... and a G5 iMac. All of which, of course, makes me a dyed-in-the-wool Mac guy. Anyone have a black turtleneck I can wear?

Not that I dislike the iPod, mind you. My wife lets me look at her video version every now and again. Without a doubt, it's iCool. I'd get one, if not for the price and higher priorities, like killing off tens of thousands of dollars in debt.

But I digress. Is the iPod really the future of Apple? Not so long as Big Mac is around. Let's review the top three reasons why not.

The power of PowerBooks
As fast as the iPod has grown in recent years, portable Macs have also performed well -- and in some cases, outperformed their MP3-playing cousins. Consider this chart, which shows recent sequential and year-over-year revenue growth rates for both product families:

Quarter

Portable %
sequential growth

Portable %
YOY growth

iPod %
sequential growth

iPod %
YOY growth

Q3 2006 57% 61% (13%) 36%
Q2 2006 (9%) 7% (41%) 69%
Q1 2006 (1%) 34% 140% 140%
Q4 2005 14% 22% 10% 126%
Source: Apple earnings releases; bold number represents top performance for that period

Don't be too surprised. Q3 was terrific for portable Macs because of the introduction of the new MacBook and MacBook Pro laptops, both of which sport chips designed by Intel (Nasdaq: INTC  ) . It's likely that pent-up demand for those products aided their performance during the quarter.

Still, it would be incorrect to call the recent reign of Mac laptops an anomaly. MacBooks and PowerBooks are showing up everywhere I go now, which is weird; I got used to the idea of being among the vocal minority. Those days are over. Reports from the AppleInsider website say the Mac maker was struggling to meet demand for its MacBook lineup during the back-to-school season.

Moreover, the MacBook was been such a hit that rumors have surfaced that Apple may refresh its entire portable lineup before the holidays, which could seriously juice Q1 2007 earnings.

Gateway to a goldmine
It's also worth remembering that the iPod does nothing without a device from which to download. For many, that's a Mac. For many more, it's probably a PC. Either way, the iPod isn't a platform, though it could someday be, if CEO Steve Jobs ever decides to morph the iconic music players into an iPhone or resurrect the Newton personal digital assistant.

And what if an iPhone hit the shelves? Would users prefer to download on the go? Research says no. According to a survey performed by Entertainment Media Research, only 6% of respondents said they'd purchase phone-based services such as VCAST, which is offered by Verizon (NYSE: VZ  ) and Microsoft (Nasdaq: MSFT  ) . Worse still, 44% of respondents said that they had no interest in downloading music to a mobile phone.

I want my iTV!
But even if that research strikes you as fantasy -- and I doubt it is -- Apple's latest foray into Hollywood's digital backyard is also deeply dependent on the Mac. Code-named the iTV, the slim device proposes to wirelessly connect your boob tune with your Mac. That way, you'll be able to pull downloaded iTunes flicks across your home network with the click of a remote.

It's brilliant strategy. Not only does Steve get to sell more muscular Macs to fervent downloaders, but he also gets to sell more AirPort networking devices, and maybe even a few subscriptions to the heretofore-worthless .Mac online service.

About Schmidt
Which brings me to Google (Nasdaq: GOOG  ) . In August, CEO Eric Schmidt joined Apple's board. Of course, there could be absolutely nothing to the arrangement other than attracting a smart executive to the Mac maker's top ranks.

Or it could be that Apple and Google see an opportunity to stick it to Microsoft by working more closely together. There's obvious synergy in the companies' software and tools, as BusinessWeek writer Arik Hesseldahl recently wrote. But here, too, any collaboration is likely to be confined to the Mac. Remember: Google Video is just as much about sticking it to iTunes as it is about trumping You Tube.

Fool for the Mac
The iPod is cute. It's even cool. But is it the centerpiece of the iEmpire? Not a chance, Fool. The iPod is what it is because of what you can download from its Mac daddy. Expect the adults to be in charge for at least a few years longer.

Think you're done with the Duel? You're not! Go back and read the other three arguments, thenvote for a winner.

Have an opinion on whether the Mac or the iPod drives Apple's performance? Don't stop here! Speak your piece by joining our Foolish community in our new, free beta service, Motley Fool CAPS.

High tech. Biotech. Nanotech. Any tech. David Gardner and his Foolish band of analysts cover it all forMotley Fool Rule Breakersselection. In the process, they've unearthed four multibagger stocks in two years. To discover their stellar selections, try the service free for 30 days.

Fool contributorTim Beyerssays you can have his MacBook Pro when you pry it out of his cold, dead hands. Tim also owns LEAP options in Apple. Get the skinny on all the stocks in his portfolio by checking Tim's Foolprofile. Microsoft is an Inside Value pick. The Motley Fool'sdisclosure policyis like that smiling face that used to greet Tim each day from the screen of his old Mac LC.


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