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News   - 11/28/2006

Measuring the iPod effect

According to popular consensus, the much beloved iPod has boosted Apple Computer's Mac sales and may ultimately help the company get into phones.

But five years of PC sales data paint a far more complicated picture than conventional wisdom would have it.

Did the arrival and popularity of the iPod coincide with a reversal of an ominous slide in sales of personal computers at Apple? Yes. But sales at many other PC makers grew as well. And some, like Acer, which doesn't even have a digital music player, gained market share at a much quicker pace than Apple.

In fact, industry experts say other factors, such as lower prices and new technology, may have as much to do with the slow reversal of the Mac's fortunes as the iPod.

In 2002, the first full year Apple sold the iPod, Apple accounted for 2.23 percent of the worldwide PC market and 3.53 percent of the U.S. market, according to figures from IDC. In 2003, Apple's global share declined to 1.99 percent and its market share in the U.S. sank to 3.17 percent.

A new trend emerged in 2004. Apple's worldwide market share continued to drop, hitting 1.96 percent. But in the U.S.--the region where the iPod has been the most popular--it rose to 3.32 percent. In 2005, the worldwide figure rose to 2.27 percent while the U.S. figure jumped to 4 percent.

Wall Street analysts at the time claimed that anecdotal evidence indicated some consumers may have been switching to Macs from other PCs.

Overall, Apple shipped 52 percent more computers in 2005 than it did in 2002. And so far, 2006 is shaping up to be a banner year. In the third quarter, Apple accounted for 2.79 percent of the global market and 5.71 percent of the U.S. market.

How much of the surge can be attributed to the iPod? That depends on your perspective. Market share in PCs has jumped. A similar "halo effect," theoretically, could give Apple a boost if, as many expect, it pushes into phones. But the iPod isn't the only thing goosing Mac sales.

"I think the iPod turned many consumers onto the Apple brand, and created something of a halo effect, but nothing drastic," wrote Doug Bell at IDC in an email. "You can also argue that the Intel and Boot Camp (a program that lets Mac users boot up Windows) moves helped them more recently."

No doubt, Apple is selling plenty of iPods. Apple shipped 8.7 million iPods in its fourth quarter, which ended in September; giving it about 75 percent of the U.S. market. It shipped 1.6 million computers

Where's the halo effect?
"I think the iPod turned many consumers onto the Apple brand, and created something of a halo effect, but nothing drastic," IDC analyst Doug Bell said in an e-mail. "You can also argue that the Intel and Boot Camp (a program that lets Mac users boot up Windows) moves helped them more recently."

During the same period, a lot of other consumer PC companies have surged without selling music players.

Acer, once a declining PC brand out of Taiwan, has been the fastest-growing major PC maker in the world for the four years and consistently outpaced Apple, Dell and others in most quarters. In 2005, the company grew shipments by 58.1 percent. Acer now commands 5.9 percent of the world market and is the fourth largest vendor, according to Gartner. In 2003, the company only had 2.9 percent of the worldwide market, or about half as much, and wasn't in the top five.

Put another way, Acer has grown at a faster rate than Apple, even though Apple is a larger company. Mathematically, that's hard to accomplish. Acer's secret? It tries to come out with the lowest-priced, or most feature-heavy, notebooks in the mid- and upper- price bands.

Over the past five years, Toshiba, Gateway and Sony have all experienced the kind of sustained growth spurts Apple currently enjoys.

"The halo effect is barely detectable," said Roger Kay, president of Endpoint Technologies. "There has been a jump in notebooks in the past two quarters that could be attributed partly to iPod, but they are lagging in desktops."

Apple wasn't immediately available for comment.

Interestingly, Apple still has a lower market share worldwide than it had before Steve Jobs returned as CEO--and at that time sales were plummeting.

Source: News.com    
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