I claimed, I saw, I bought. Apple (NASDAQ:AAPL) now has a home in my portfolio. The details:
- All of my purchases -- both stock and options -- were made on Oct. 17.
- My stock buy-in price is $98.83 per share.
- My options are LEAPs, mature in 2011, and feature an $85 per share strike price.
Most of you -- especially those of you who are traders -- will smile in seeing those numbers; I've already realized a decent gain as of yesterday's close. But with Mr. Market's mercurial behavior, those gains could disappear in seconds.
Why I'm in for the long haul
Let him be, I say. My faith in Apple is cemented from years as a customer. But also because of two very interesting conversations I had during our recent Rule Breakers team trip to Silicon Valley.
The first was with Bill Gurley of Benchmark Capital. He also owns Apple shares. OK, maybe a few more than I do. Fine, a lot more than I do. He's still bullish, and that's what matters: "The majority of entrepreneurs who present to us are using Macs, and these are the influencers," Gurley says.
I've noticed something similar. People I never thought would try a Mac are now trying one. Sure, some of these customers will switch back to Windows. But others won't. Vista's problems -- real or imagined -- have opened a window that Justin "I'm a Mac" Long has climbed through. He's there in the living room, parked in the easy chair, sipping a latte, and generally wondering what you'd like your Mac to do next.
The other conversation was with one of my rebellious teammates, Karl Thiel, during our drive from San Francisco to the airport. As he sees it -- and I'd have to agree -- his $700 Vista laptop is roughly equivalent to a $1,200 MacBook. Why the premium? Is it really worth it?
Yes ... and no
There is no easy answer to that question, even though Harry McCracken at Technologizer has made an excellent attempt at providing one. His conclusion:
The MacBook is close in price to the laptops I looked at which it resembles most closely, all of which target what I think of as the low end of the high end of the notebook market; if there's a Mac Tax here, it's not worth worrying about. That said, it's possible to get a somewhat more utilitarian 13-inch notebook -- one that's better-equipped than the MacBook in some respects, even -- for a lot less.
Hence Karl's point. Consumers are consumed with fear. Cats and mice could begin cohabitating any day now. Why invest in Apple if there's a price premium to what Dell (NASDAQ:DELL), Hewlett-Packard (NYSE:HPQ), and Lenovo are offering?
My answer is simple: Because there is no Mac Tax.
Three reasons why you'll buy Apple, too
Put down the keyboard, grasshopper. I'm not denying the existence of a price premium. Macs do cost more. But what does that premium buy you? Three things, principally:
- Choice. Justin Long can disguise himself as John "I'm a PC" Hodgman, but the reverse? Yeah, that might not work out so well. Remember: Macs can be PCs but PCs can't be made into Macs. Not easily, at least. The good news? A new Dell notebook can be made to run Windows XP, or Red Hat's version of Linux.
- Leopard. Whereas Vista has unleashed the Microsoft (NASDAQ:MSFT) haters, Leopard, the latest version of the Mac operating system, has won admirers. And for good reason. Advanced features like Spaces allow me to run Windows on one screen and my Mac on another. I only see the view I want to see, when I want to see it. Thumbs up on productivity.
- Geniuses. If the Mac OS is the root of Apple's competitive advantage then its network of retail stores is the trunk. Forget about the iGear being sold through Best Buy (NYSE:BBY). I'm talking about the 247 Apple-owned-and-operated retail locations that, by my math, produced roughly $1,000 in sales per square foot last quarter.
And one more big reason ...
Stores are also home to Apple's Geniuses, problem-solvers who'll tackle anything that has an Apple logo on it, often for free, while you wait. Think of it as the Nordstrom touch for the savvy computer shopper. Neither Dell nor HP can match that level of service, nor would they want to, given what they're selling PCs for.
And that really is the point. Apple faces low-cost rivals in every market -- Dell in PCs, Amazon (NASDAQ:AMZN) in music and video, Motorola (NYSE:MOT) and High Tech Computer in smartphones. CEO Steve Jobs and his team are doing exactly what they must: They're creating better, more integrated experiences and showing them off in these hugely profitable display cases that we call Apple retail stores.
Welcome home to my portfolio, Apple.
