When Will Apple's Harvest Start?
Rachel Rosmarin 06.07.06, 6:00 AM ET
Burlingame, Calif. - Apple Computer rolled out yet another version of its iPod Tuesday: a black, stainless-steel number engraved with the signatures of Bono, the Edge and the rest of their U2 bandmates. This second-generation U2 iPod is likely to move a few more units of the iconic music player for Apple Chief Executive Steve Jobs, who has sold more than 50 million iPods since October 2001.
But as impressive as the iPod has been for Apple (nasdaq: AAPL - news - people ), its success has yet to transfer
to the company's PC line, which remains a high-profile also-ran. In the last quarter, Apple’s U.S. market share
dropped to 3.5% from 3.6% in the same period last year, according to research firm Gartner. Worldwide, Apple’s
share data are even more depressing--going from 2.2% to 2.1%.
And though Apple’s shipments increased 3.1% to 570,000 computers, according to Gartner, shipments for the rest of
the industry grew 13.1% in that same period, driven in part by price cuts from struggling Dell (nasdaq: DELL - news - people ). That has to be worrisome for Jobs and his company, who have long been banking on a halo effect from the iPod to boost computer sales. Apple is now throwing in a free iPod with sales of certain laptops.Five years into the iPod era, it may be time to give up on the notion that the product lines are intertwined.
“There’s no empirical evidence to suggest that iPods make people buy computers,” says IDC research manager David Daoud.
Apple's newest hope is that its new line of “Mactels," built around Intel (nasdaq: INTC - news - people ) chips, will give it a boost. Only half of the new Intel units were available during the most recent quarter. But don't expect sales to shoot up soon, says Samir Bhavnani, director of research at Current Analysis, who says the company's market share could remain flat until the end of 2006.
But Bhavnani predicts that Apple will begin rebounding this fall. So does Daoud, who thinks the company’s share could shoot up to 5.5% by the end of the year.Apple's Intel deal will begin to pay off late this summer, these analysts predict, spurred by back-to-school purchases. A new line of Macbooks that sell for less than $1,100 should appeal to parents and the college-bound--especially now that these same computers can run Microsoft's (nasdaq: MSFT - news - people ) Windows via Apple’s BootCamp software.
And a new retail test with big box chain Best Buy (nyse: BBY - news - people ) in California could set Apple up to introduce its wares to a new clientele. Until now, says Bhavnani, only iPods and an occasional MacMini were available at Best Buy, the country's largest consumer electronics retailer. Now, big displays boasting “Mac Is Here” grace the entryway of Southern California stores and lead shoppers straight to Apple desktops and laptops.
Should Apple’s share grow by the end of the year, another PC maker’s will shrink. That’s likely to be Sony (nyse: SNE - news - people ), says Bhavnani. Sony’s Vaio line appeals to the same design-conscious consumer who might choose a $2,800 souped-up Apple product like the MacBook Pro, which comes with a 2.16-gigahertz Intel Core Duo processor and a 120-gigabyte hard drive.
While a similar Sony product, such as a fully configured Vaio AR170, costs a few hundred dollars less than the MacBook Pro, consumers could prefer the cachet of the Apple brand.
Sony will also be undercut by stylish and inexpensive notebooks from Hewlett-Packard (nyse: HPQ - news - people ) and Toshiba (other-otc: TOSBF.PK - news - people ), such as the copper or peacock blue Toshiba Satellite M100, which costs the same as the MacBook when configured similarly.
But regardless of how Apple's PC sales actually fare, don't expect to hear much discussion about them--after all, there's always a new iPod rollout around the corner. “We all have ADD when it comes to that company," says Bhavnani.
