The Apple Halo

The financial analysts were wrong about Apple’s results this quarter, many of them predicting that the iPod sales would stall rather than increase. The iPod accounts for roughly a third of Apple’s revenue, so the analysts were predicting a very sober set of results.

As it happened, Apple’s quarterly results were as intoxicated as the previous quarter. Revenue rose 75 percent to $3.52 billion from $2.01 billion and quarterly profit more than quintupled. Apple’s halo was glowing and its stock rose accordingly.

Apple actually shipped more than 6 million iPods, 1 million more than expected. Sales of Tiger, the new version of Mac OS X pulled $100 million in revenue and sales of computers grew by 35 percent, three times the growth of the PC market. A good deal of this may be “iPod halo”, but I think there’s a fair amount of Windows fatigue in this too.

The prediction by Forbes that Apple will grow its PC market share from 3 percent to 5 percent this year, looks like it will be fulfilled.

Remember that the PC market roughly divides in half between the home and the business and Apple is probably not getting any significant growth in the business market. So we can think of Apple as heading towards a 10 percent share of the home market.

If you are wondering whether Apple’s switch to Intel will put buyers off, the evidence at the moment seems to be: no. Here’s a simple way to take the pulse of the PC market, whenever you feel like it: Go to the computer section of Amazon and click on the top sellers link under the “computers” tab. This will show you Amazon’s list of top selling computers – updated every hour. Apple computers normally occupy half of the top ten slots (at the time of writing they occupy 5 of the top 6). This indicator showed no drop in demand following the Intel announcement. Of course, demand may diminish in the coming months, but I suspect that most buyers don’t care too much about it either way.

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