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AAPL update -- still looking good

Apple (AAPL) is on track to post a new closing high today, so I thought I would celebrate that and reiterate my view that AAPL is still an attractive stock to own. I've been recommending AAPL repeatedly since my first post on the subject in Oct. '08, and I've owned the stock for almost 10 years and still do.

Apple's success lies in its ability to innovate and to use industrial design to make complex computers easy to use. Its products are beautiful and reliable, and its software is well-thought-out. Apple is arguably the only computer electronics company that has the capability to innovate in more than one area, and it has expanded its product line impressively over the past several years. Its market share is very strong in smartphones and mp3 devices, and it is steadily gaining market share in the laptop and desktop area. Apple's market cap has surpassed that of Microsoft, and for good reason. Microsoft is a one-trick pony that long ago lost the ability to innovate, and it's products and software appear to be designed by engineers rather than by artists and industrial designers.

An article in today's WSJ reminded me of my recent trip to Best Buy (BBY), in which I took three Argentine friends there so they could buy some cameras and computers. Argentina has virtually no Macs—everyone uses PCs, and the great majority of the PCs run the now-obsolete Windows XP. I showed them the Macs we have at home, and encouraged them to upgrade to a Mac laptop. They were reluctant however, since none of them had much computer expertise. What would they do if they ran into a problem?

The one thing that piqued their curiosity, however, was the iPad. They were entranced by its magic and simplicity. I used the iPad to show them our photos of Africa, and then I pulled up a map of California so they could plan their trip to San Francisco. Scrolling around the map, zooming in on details, flipping through photos, all accomplished with a single finger. "Does this map program come with the iPad? Will it work in Argentina?" they asked. Yes, I replied. "Can I do email and internet on the iPad?" Yes, I replied, and it's quite easy. You really can't screw things up, because all you need is a finger. No file system, no launch commands, no ability to push the wrong button. There's only one button in fact, and it always takes you back to home base. No moving parts. Sold.

After almost three hours of haggling with a very patient and spanish-speaking Best Buy employee, they loaded up their shopping cart with two iPads, two Canon SLRs, and an assortment of lenses and accessories. To my surprise, they even negotiated a 20% discount on the accessories. While they were checking out (around 3pm on a weekday) I noticed that the store was unusually full of customers, and there were quite a few standing in line. It's purely subjective on my part, but I think that Best Buy has really filled out their product line and has learned how to sell things much better than it did just several months ago. Now, as the article mentions, they plan to sell iPads at all their stores, not just a select few. There's potential here for BBY to do quite well as the economy improves..

As the article also mentions, according to Best Buy's CEO Dunn, "internal estimates showed that the iPad had cannibalized sales from laptop PCs by as much as 50%." That's the thing that has always sustained my belief in a bright Apple future: Apple's ability to gain a significant share of the gigantic market of Windows-based computers.

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