Apple hopes iPod success will seed PCs in the boardroom

THE tech sector is used to hearing grand claims from Apple chief executive Steve Jobs about the impact of his company's products, but his managing director in the UK, Mark Rogers, is just as bombastic, greeting last week's launch of a speaker system for the iPod as nothing less than the "reinvention of the hi-fi".

Rogers, 37, has good reason to be ebullient. Sales of the iPod portable music and video player - 14 million in the last quarter alone - have seen Apple report its highest ever revenue and earnings, with a net profit of $565m in the final quarter of last year.

The iTunes Music Store, which sells music downloads for the iPod, now has a dominant 80% of the UK digital music market.

The new iPod hi-fi may not be Apple's most revolutionary product - it really is just a big speaker for the iPod - but its launch is significant insofar as it demonstrates a greater appetite for the $300m iPod accessories market which, up until now, Apple has left largely to third parties.

This lucrative 'iPod economy' includes everything from carrying cases to kits which allow users to listen to their iPods in their cars, and with sales of such products growing faster than the iPod itself, it is no wonder that Apple wants a slice of the action.

Rogers is keen, however, to emphasise that Apple's transformation in recent years is not just down to the iPod, although he concedes the diminutive device is having a 'halo effect' on sales of Apple's personal computers. "The iPod has certainly got people using Apple technology and it has exposed them to the innovative hardware and software that we produce. That's led to a dramatic growth in our computing sales as well," he says.

While Rogers has no control over Apple's product development or overall marketing strategy, all of which are centralised in California, the former accountant does have responsibility for local sales and marketing initiatives.

One of his most significant achievements has been in the education sector, where Apple has recently displaced the PC manufacturer Dell to take the No1 spot in western Europe, with a market share of 15.2%. It represents a particular win for Rogers given that, in the US, Apple remains second to Dell.

"We're very pleased with the progress we're making in education," says Rogers. "It's only in the last few years that we have emerged in Europe, and we're seeing a similar increase in our share in the UK [which stands at 12.5%]."

Rogers says the iPod 'halo effect' is partly responsible for this upturn. "We're seeing the iPod being used to deliver lectures to students and it's also being used in podcasting," he says, referring to the technology which allows mere mortals to record their own radio programmes and publish them on the internet, ready for download on to portable music players such as the iPod.

Podcasting's popularity in education was given a boost last year when staff and pupils at Musselburgh Grammar School in East Lothian began the UK's first regular podcast, containing news and features about school life. Crucially, for Apple, the school uses Apple's Mac computers to create these programmes.

Apple's success in education is particularly strong in Scotland, claims the dominant Apple dealer here, Scotsys, which recently merged with the Edinburgh-based IT company, the Adventi Group.

"The uptake in further and higher education for courses based on Apple technologies has been increasing over the last few years," says Scotsys managing director John McAleenan.

"Sound and video editing packages, such as Apple's Logic and Final Cut Pro, are now industry standards and you can now have a career being an Apple software specialist."

McAleenan says confidence in Apple is at an all-time high, but is nonetheless frustrated by the attitude of corporate IT departments. "There is a complete distrust of the Apple platform by IT professionals. I'm fed up with people saying they can't have Apple in their networks. It's not difficult, it's just that they don't want to understand the technology or they can't be bothered," he says.

Rogers, however, believes that there is a significant shift going on in which the kind of consumer technologies that Apple specialises in are having an increasing influence in the workplace, whether it be in instant messaging, corporate video production or podcasting.

"One of the things you see in the consumer space is the ability to be flexible and to embrace new technologies very quickly, and I think that's constantly been a challenge in the enterprise space because of the way they lock down desktops and have lots of security," he says. "Security is extremely important, but at the same time you need to build in the ability to be flexible and to utilise tools that your workforce are comfortable with and want to use on a regular basis."

Apple is clearly hoping that its recent decision to use Intel processors in its computers, in preference to IBM chips which are now targeted more towards games consoles such as the Xbox, will boost its fortunes in the corporate IT market, but it is likely to be a tough battle given Microsoft's overwhelming dominance and the mistrust of Apple technology in this environment.

Apple's decision to open its own worldwide network of retail stores is an attempt to change attitudes to its personal computers, with stores now open in London's Regent Street, Birmingham, Sheffield and Manchester.

Mark Rogers refuses to comment on the locations of future store openings, but it is more than likely that stores will open in Glasgow and Edinburgh once Apple can secure prime retail locations.

Chris Braithwaite, a director at real estate company Cushman & Wakefield, says: "Apple wants to open in the 20 best retail locations in the UK. It has told us just to get on and find the space."

It is thought that Glasgow's Buchanan Street could be a prime candidate for such a store. However, any Apple-owned stores would compete head-on with Scotsys's own independent retail stores in Glasgow and Edinburgh.

John McAleenan prefers to look at the positives. "Anything that increases people's awareness of Apple is no bad thing," he says. "However, our advantage is that we provide the whole ICT [Information and Communication Technology] solution. Apple computers don't exist in isolation and we're able to support both Macs and PCs for markets like education. That's something a consumer-oriented Apple store could never do."


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