Apple's appointment of Google CEO Eric Schmidt suggests a major move into the
enterprise market, said Think Equity analyst Jonathan Hoopes.
In a research document passed to clients and received by Macworld he describes
the appointment as both "significant" and as "fertile ground for fun
Hoopes notes that Apple director, J Crew CEO and former Gap CEO Millard Drexler
joined Apple's board just before the company launched its retail store network.
He suggests the appointment of Google's chief could be a "meaningful harbinger"
of future activity.
The activity takes place as Apple seems set for a growth spurt: "Never in the
history of the PC has a company been better positioned than Apple is at this
time to both gain share and improve profitability, in our opinion," he writes.
The analyst also observes that Schmidt's appointment means Apple has eight
directors, against a historical average of six since 1997. The last time the
board was so well staffed was just before Apple CEO Steve Jobs returned to the
company from Pixar.
There's another link between Apple and Google that Hoopes suggests: "We note
that [Apple board member] Bill Campbell is not only an Apple CEO Steve Jobs'
confidante, but is also credited with having 'saved' Google and also having
'coached Eric on what it means to be a good CEO',".
He adds: "If our read of Schmidt's appointment is on target, that next "next"
thing will likely entail a concerted effort to establish a strong presence in
The analyst continues his assessment by explaining that with the release of Mac
OS X 10.5 Leopard, the OS will no longer be a Unix-based system, but a true
Unix OS -- at the same time as Sun moves to more broadly embrace and promote
open source solutions.
He also anticipates Apple may begin to field advertising within iTunes -- and a
relationship with online ads champion, Google, can't hurt such a move. He also
suggests some moves to provide user-generated content through Apple's media
browser, such as that available through Google Video.
Finally, the analyst proposes eight questions he'd like addressed, the chief of
which asks: "What part of Schmidt's background is the Apple board most anxious
to tap? Does it seek wisdom from his time at Xerox PARC, his time at Bell
Laboratories, his time at Zilog, his time at Sun Microsystems, his role in
Java, lessons learned while at Novell, or his time at Google? All of the above
is not an acceptable answer."
Think Equity holds a Buy rating on Apple stock with a US$90 price target.