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Subject:  Good RM Articles on AAPL and KO in Business Week Date:  2/19/2000  7:43 AM
Author:  JLMoran Number:  5614 of 8329

There was a pair of excellent articles in the current (Feb. 28) issue of Business Week. The first was on Apple and the second was on Coca-Cola. Both articles can be found online at However, you'll need to be a registered subscriber to view the articles (at least until a week from now, when they should open up to the general public).

The Apple article was a short, 1-pager about OS X. What surprised me was the incredibly positive attitude about the article. In essence, it said that OS X was going to give consumers a "friendly and easy to use version of the powerful UNIX operating system." Even more surprising, they said that it's going to make Microsoft's consumer version of Windows 2000 (not due until some time NEXT year) look weak in comparison.

BW felt that Microsoft made the choice to retain full backward compatibility with their previous OS, and (as I'm reading it) that choice has hurt them in terms of how good an upgrade Windows Millenium and Windows 2000 will be.

Apple, on the other hand, chose to give the operating system real improvements at the sacrifice of requiring users to upgrade their software to get the full benefits (it does note, however, that users WILL be able to run their existing software on the new OS, just without all the extras it gives). In BW's opinion, this was the better move, since users will get a much more powerful and stable OS out of the deal.

If this isn't a sign that Apple is finally regaining its position as a real and major market player (if not yet a true Rule Maker), I don't know what is.

The article about KO was a real Rule Maker statement for the company, and a good reassurance to me that the new CEO "gets it" when it comes to what needs to be done to make Coke competitive again.

In a nutshell, Coke has really been losing out to non-soda beverages (bottled water, teas, fruit juices, etc.) produced by Pepsi (who owns Tropicana) and Quaker (who owns Gatorade and Snapple). Their response to this so far has been to put "second rate" products of theirs (Minute Maid, Fruitopia) out with little promotion and and little care for the quality of the product. As far as they were concerned, "Coke is, has been, and always will be IT".

The new CEO recognizes this is no longer true. He has moved up several execs from the non-carbonated beverages departments, and plans on beginning an agressive campaign to expand Coke's market to these other beverage categories. No, it won't be an overnight transition, and it'll probably take a few (or many) years for Coke to regain dominance, but given their cash situation and other strong Rule Maker abilities, I think that with this new CEO they have a good chance to start regaining the throne these pretenders have attempted to steal (to use the metaphors scattered throughout "Rule Breakers, Rule Makers").

Looks like I picked a good time to buy into both of these stocks. :-)
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