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Why A Recession Could Be Great For Apple

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by Kevin Maney
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Oct 22 2008 10:19am EDT

Why a Recession Could be Great for Apple

Kevin Maney writes: After all the analysis of Apple's earnings yesterday, after jaws got hinged back into place after seeing iPhone sales numbers, after everyone heard Steve Jobs' voice and was convinced he's not about to go knocking on heaven's door -- one moment in the conference call stood out.


Jobs said Apple has $25 billion in cash, no debt, and is ready to innovate and steal market share from competitors struggling through tough economic times.

Recessions can be fantastic for the strongest. Jobs' comments echoed the way IBM used the Great Depression to vanquish competitors and set itself up to dominate technology for decades. Weak players disappear completely. Many companies, finding their revenue squeezed, lay off talented workers, cut R&D spending, cut back advertising, and generally try to survive more than grow. That gives the strongest player an opening. It can aggressively develop new products so it gets even farther ahead of competitors. It can hire the most talented people. It can be more visible to consumers simply by advertising as much as it had been.

The real slingshot comes when the economy turns up again. If Apple can do what Jobs suggests, when the economy emerges at the other end of the tunnel, competitors could be caught flat while Apple has aligned the products, talent and branding to take off like never before.

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