Analyst: Vista will dent Apple market share short term

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.

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.