by Wes George  Apple, Finances, Money, and Trading. Mmmmmmm...... Good MacWorld Has Many Challenges To Address January 3rd, 2000  On Wednesday morning Steve Jobs will deliver the keynote at MacWorld in San Francisco. Everyone has their own predictions of what will be announced. Bryan Chaffin, my illustrious editor-in-chief, has listed the things most likely NOT to be announced at MacWorld, and a few weeks ago I posted a laundry list of things I'd like to see happen, if not at MacWorld then later on in 2000. Some have opined that MacWorld will be dullsville since Apple's four cornered hardware strategy has already been clearly delineated. While Apple may not unveil anything as sexily tactile as the iBook, this MacWorld Expo comes at a critical juncture in Apple's history for shareholders and the Mac Faithful alike . In fact, San Francisco in 2000 contains the potential for revelation of the likes unseen since Uncle Gates appeared larger than life behind Mr. Job's podium to fill Apple's coffers with Microsoft's gold. The times, they are a'changin'. It is precisely because Apple has so well defined its hardware trajectory that the potential for real surprises is possible. At MacWorld in NYC last July it was a forgone conclusion what the headline would follow in the keynote address months in advance. In San Francisco the issues at hand are far more complex: How is Apple going to evolve its business strategy to thrive in the amorphous networked world we are entering? How is Apple going to make the gargantuan step to OS X without tripping up? What are Apple's goals now that its hardware strategy is largely in place? Does Apple plan to spin off QuickTime as an IPO? How will Sherlock evolve to its full potential as a new type of intelligent browser? How will Apple consolidate its worldwide marketing divisions in the network economy? What new forms of marketing opportunities will emerge on the Internet worldwide? How does Apple plan to expand its marketshare into China and other ignored but vast markets? The computer hardware industry shows signs of stress that are often precursors to a major shake out. Deflation in hardware prices continues to chew at the gross margins of PC vendors. Apple, which has the highest margins in the industry, has prepared shareholders not to expect margins to remain as high as 28% throughout 2000. New form factors are emerging as miniaturization continues to morph the limit of PC design into smaller, cheaper and more specialized shapes. Although, I poked fun at the premature information appliance hoopla at Comdex in my article, The Sorcerer's Apprentice, a more rigorous environment is emerging for PC vendors. The evolution of new technologies from wireless networking and satellite Internet connections to new forms of user interface design promise to alter the shape of the PC into something wearable and ubiquitously networked. Static desktop workstations will be with us for some time yet, but we can now imagine a day beyond the desktop when computing (for lack of a better word) will be seamlessly ingrained in our lives — as invisible as the plumbing of your house. The challenge and the promise of the Internet to radically alter the way business is done is so in your face today that Apple must respond. Every PC vendor on the planet is aware that their business model is in need of a serious redesign, including Apple. The challenge is that there is no precedent or obviously optimal strategy for capitalizing on the incredible power of the net. No, Mr. Dell's solution isn't sufficient, nor or are Gateway's country stores the whole answer. PC vendors that can rapidly adapt to the global network economy will thrive, the slow will perish. Some creativity will be required. Something transcendent. Apple's team led by Mr. Jobs has slain every other dragon in their path. No doubt they can rise to this new challenge by morphing Apple's business model into a pure information age corporate entity, whatever that might be. How Apple chooses to meet the challenge of this absolutely critical new year will determine if we will still be using Macs in 2010. I'll be riveted to my aging desktop paradigm watching Steve's keynote address via QuickTime. Your comments are welcomed. Check out the Apple Trader Forum in the new Mac Observer Forum section! Talk about Apple's stock, the markets, or give your best stock tips, just come on in! The Apple Trader's Most Recent Columns The Dawning Of The Age Of Aquarius? January 2nd Apple's K-10 And Apple's Future December 18th Apple's Stock: A Double Your Money Gamble? December 4th The Apple Trader Forums The Apple Trader Archives Back to The Mac Observer For More Mac News! Wes George writes about the financial side of being a Mac nut. Wes has followed Apple's finances for the last 7 years and comes to The Mac Observer every Monday to tell all about his opinions. He is, in his own words, "inordinately fond of money." If you would like to write Wes, make it nice. Someday you might own a company that has something to do with Apple, and Wes will probably still be writing for The Mac Observer...... On the other hand, Mr. George is known to love a rousing, hair-raising debate, so send him your worst! Disclaimer: This column is for informational and entertainment purposes. While Mr. George may be sage indeed, his writings can not be construed as a solicitation to buy, nor an offering to sell any particular stock. As with any trading in the financial markets, you must use your own judgment to make the best trades that you can. 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