Analyst: Vista will dent Apple market share short term

Analyst: Vista will dent Apple market share short term

Summary: Apple's Mac market share will take a hit in March due to the launch of Vista. That in turn will raise questions about Apple's halo effect strategy, said Piper Jaffray analyst Gene Munster.


Apple's Mac market share will take a hit in March due to the launch of Vista. That in turn will raise questions about Apple's halo effect strategy, said Piper Jaffray analyst Gene Munster.

In a research note, Munster said that based on his "50 retail checks" he expects Mac market share to fall from 2.5 percent in December to 2.3 percent in March.

"Given this would be the second consecutive quarter Apple will lose market share, there will be debate as to the strength of the halo effect," said Munster.

Munster's current call is that Apple's halo effect--which dictates that folks who buy an iPod will also buy other Apple products--"is still strong" and Mac market share should rebound in June as early Vista demand fades.

Nevertheless, Munster reveals some interesting cross currents. Munster surveyed 50 Best Buy stores and came away with the conclusion that Vista sales have not met expectations but have increased PC sales. According to Munster, 80 percent of the Best Buy stores surveyed indicated they sold less Vista than they thought. All 50 stores also had full stock of Vista and only one sold out (Vista Ultimate). Of these stores, 72 percent indicated PC sales increased.

My translation: Consumers aren't buying Vista upgrades in a box. But PCs with Vista installed may be moving off shelves. Bottom line: It's hard to conclude Vista isn't selling based on shrink-wrapped box sales.

What's unclear is whether any of those additional PC sales are going Apple's way. Short term, Apple takes a hit, but long term may gain.

This logic sounds a bit fuzzy, but here's Munster's argument:

"Due to pent-up demand for PCs with Vista pre-installed, we anticipate a spike in PC sales during the Mar-07 quarter, which could put downward pressure on Mac market share. We also anticipate a general increase in computer sales, including Macs, as customers consider several options for their computer purchase."

So perhaps there's an opportunity for Apple. Munster said:

"Apple is recognizing its opportunity to gain mind share with consumers. The company views this season of Vista-related computer purchases as an opportunity to sell more Macs. Around the time of the consumer Vista launch (1/30), Apple initiated several strategies to attract Vista customers toward the Mac. In an email to registered iPod owners with PCs, Apple asked customers: "Upgrading to Vista? Think Mac." Apple also launched national TV ad campaigns in the US, UK, and Japan criticizing Vista's difficult installation process and frustrating security features. The retail stores will also be used in an effort to monetize the Vista opportunity as store employees are emphasizing the fact that Macs run both Mac OS X and Windows."

The big question is whether any Apple's marketing will work. My hunch is that it won't. There are PC people and there are Mac people--although folks are becoming increasingly bilingual. Meanwhile, I don't buy the halo effect. If iPod purchases led to new Mac owners Apple would have more market share by now.

More important to Mac's market share will be the summer launch of Mac OS X Leopard in the spring. That launch is likely to drive demand for Macs. However, get ready for increasing noise about the issue Munster raises in the upcoming months. While Apple may have dropped the "computer" from its name, Mac sales still matter to the company's strategy and will be monitored closely.

Topic: Apple

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    Vista will be the best thing to happen to Apple in years. It's already starting.

    Between Dell Hell and Microsoft customer abuse policies, it's likely to be a banner year for Apple.
    • Do you still believe in

      Do you still believe in Father Christmas, Easter Bunny?
      Thought so. You my friend are living in cloud cuckoo land with all the other Mac?Linux users.
      Get a life...
      • Well between all the insults are you trying to make a point?

        The poster your replied too made the statement that 2007 is going to be a good
        year for Apple. He slammed Dell and MS in the process however he's certainly not
        the only person Mac fan or not that is not impressed with Dell there are plenty of
        PC users who have their sad stories about Dell and Dell service. As for MS you
        don't have too be a Mac Zealot not to be in love with some of MS's policies again
        that was the gist of his claim. So again are you countering with a statemtnt that
        claims 2007 will NOT be a good year for Apple? If so why?

        Pagan jim
  • Flawed logic!

    People put off buying a new PC for weeks prior to the Vista launch, what is going on now is just pent-up demand. BUT, if you look at the total sales, they are down.
    No more people are buying new PC's with Vista than they were with XP, there is evidence that even less are. This is actually good news for Apple.
    Your conclusion is totally errant
    Reverend MacFellow
    • Yes, your logic is flawed!

      Sales for PC's since the launch of Vista are up 175% year over year. For the slow minded Mac Lemmings, that means there are more computers being bought now then there was a year ago at this time. Your logic and your conclusion are the ones that are errant!
      • you must be joking

        175% ?!?! Where on earth did you get that number? That means if say, 1,000,000 machines with XP were sold in the first 1/4 of last year, that 2,750,000 were sold in the same period this year. There is no way in hell that sales are up almost 3x.

        If anything, I say sales will be down some, as a lot fo people don't want vista.
        • Your right!

          The correct number for year over year is up 63%.

  • Looking in a vaccum

    The surge in PC sales POST vista is a direct result of the lull in PC sales before Christmas through to the launch date. Millions of people took the advice of analysts who told them "Limp along with your current computer if you can, and buy a new machine with Vista installed".

    If Vista were not released, sales would have ticked along like always, people replacing computers when needed/desired.

    As for Vista taking market share away, I doubt if you average Oct-March, you would see any change. Anecdotally, I have read hundreds of blogs, talkbacks, boards, etc and the ratio of people saying "Apple here I come" or "I'll never buy another PC with Vista, Apple will be my next computer" VS "Vista here I come" from previous Apple users is at least 50 to 1. Remove the fudsters and it is probably an actual 10 to 1.

    Bottom line, I don't think Apple has anything to fear from Vista at all.

  • Nothing will change market share-wise.

    The statement "There are PC people and there are Mac people" pretty much sums it up. For most scenarios there isn't alot you can do on PC that you can't do on MAC and visa versa. People will stick to what that know.
    • 2.5%

      Where do these numbers come from? I read somewhere the number is 6%, someone
      else says it's 4%, now this guy says it's 2.5%. Web surfing stats put it around 9%.

      I think the reality is, no one really knows.
      • I think it's sales

        2.5% of the computers sold where Apple computers vs the rest PCs with Windows installed. It's not really market share.
        • Technically it is market share

          [b]market share[/b]
          ?noun Economics.
          [i]the specific percentage of total industry sales of a particular product achieved by a single company in a given period of time.[/i]

          The confusion seems to arise when people look at installed user base, the numbers web surfing stats reflect, which appear to be higher than current market share. I guess user base could be looked at as a moving average where market share is a point in time number. In theory I suppose current market share would be an indication of what we could expect for future user base percentages.

          Just picking nits. :)
          • Good point

            Always good to have someone clear it up.

            The points the same just had it backwards. Installed user base I think hovers around 8%. Installed user base is the important number though, market share is really meaningless to most people unless you are getting a cut of those sales.

            When it comes to installed user base that's what I think a developer would look when deciding if they will make say a OSX version of thier software.
          • Apple makes money on sales...

            ... even though I give the company credit for finding ways to make money from its installed base. There's a song called "Master of the House" that pretty well sums up the Apple strategy.

            If people kept the Macs they buy for 10 years, say, the company might have a 10% installed base with no sales at all. That would make Apple unhappy.
            Anton Philidor
          • True if all you sold was hardware

            So while news like that would kill a company like DELL it really doesn't matter to Microsoft. Apple has the best of both worlds. They can sell a quality machine that lasts and keep selling you software for that machine through out it's life.

            With Dell, once they sell you the PC they hoping it dies as soon as the warranty end so you buy again. Microsoft likes this too as it's an new OS sale but really they'd survice if Dell sold PCs that lasted 10 years.
          • Macs are good but 10 years?

            Many Macs last 10 years but their useful life is around 5-7 years depending on the
            model. After that they end up just taking up space. Mac users tend to hang onto
            their Macs longer than average PC users, but that's mostly because a lot of PC
            users tend to buy really cheap crappy PCs and to them they are pretty much
            disposable. Still, you would be amazed at how many businesses still run Windows
            2000, so some people keep PCs a long time, too.

            As for Apple's sales, they've been really good the past couple of years and there
            are a lot of switchers. Apple is doing very well in the US, but not so well in some
            foreign markets. Some of the growth probably has to do with the Intel switch and
            people who waited for the switch to purchase. When Adobe CS3 comes out there
            should be a jump in professional Mac sales. Also Leopard will probably sell some
            Macs, but unlike Vista, Mac users will upgrade in mass. Leopard will be a must-
            have upgrade.
          • Remember what marketshare means

            It means "units shipped", not units sold. Those numbers include unsold boxes of Vista or OSX sitting on the shelf in stores.
            tic swayback
          • Unless the stores inventories are rising ...

            ... they are the same thing. The survey of Best Buy says sales for PCs are up.
          • And they have more on the shelf too

            The Store I was just expanded thier computer section 3 times it's orginal size and it's filled with all kinds of desktop and laptops. Why would they do that? Sales must good. So conider that they have all that stock and must be moving that stock. Pretty impressive.
          • Can go either way

            I just find "marketshare" to be a confusing stat. No one gives out "units sold" numbers. If MS sells copies of Vista to BestBuy, but no customer buys them, they still count. If I buy a new computer that comes with Vista for my company, and I have a seat license for Vista, that counts as 2 copies of Vista, even though only one will only be used. Ditto for Apple. So the numbers are not necessarily much of a reflection of real world usage or even purchasing.
            tic swayback