I’ve had quite a few friends ranting and raving about Apple stock, that its just going to keep going up, mac sales are up, iPhones are hot, and Jesus himself might come back to earth early so that he can get his hands on a new iPod nano. They are all  going hog wild buying their stock….BUT while Apple is doing well, there are some less obvious things going on that could (potentially) cause a DROP sometime in the not too distant future. Its just one more reason you should diversify, don’t bank on any one stock. ALWAYS diversify. Even the so called experts are 50-50 guessers.

So for your benefit, here is an analysis of Apples last quarter earnings I did for an investment site, and due to the advantages of freelance writing, I can post it to my own blog too…

Apple released its quarterly earnings statement and overall things were positive. Macintosh and iPhone sales are way up. There is, however, one very troubling thing. Until about five years ago Apple was on its way to Packard Bell-esque oblivion and Steve Jobs seen as “the guy who could have been almost like Bill Gates.” Then the iPod helped the company come roaring back. Well, it appears we have come full cycle. The iPod is now the apple product on life support and Apple is now a computer company again.

Ok, so life support might be a bit of an overstatement but there is no denying that the iPod has seen better days. During the companies holiday quarter this year Apple sold only 5% more iPods than it did last year. Of course the knee jerk reaction is to blame consumer spending and the threat of a looming recession. The problem with that is that over the same time period Mac sales increased by 44%. A more likely scenario is a combination of changing consumer interests and market saturation. I was at a store when a six or seven year old came up to me to show off his new “iPod.” I looked down as he pulled out his Zune. That goes to show just how widespread the iPod has become, MP3 player is now synonymous with iPod. Though that kind of statement might give Microsoft PR a bad case of heartburn, for a product that prides itself on being edgy, sleek, and cool, commonality is not necessarily a good thing. Add this to format incompatibility and steep itunes prices and this may only be the beginning of the decline of the iPod.

In a way Apple is helping to bring about it’s own product’s demise. Media capable mobile phones are outselling dedicated MP3 players six to on. You can argue both sides of the same coin: Apple was too late introducing the iphone when they had the market cornered on MP3 playing devices or that the introduction of the iphone is fueling the iPods downfall. Why should I buy an iPod when I can have an iPod that can make calls and surf the internet too? Of course when it is all said and done Apple is still the leader in personal music playing technology but if they don’t want to go the way of the walkman it is time to take some steps to invigorate the product that put them back on the map.

Let me sum up: yes they are still good, but its not all roses and champagne and caviar.

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