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Apple is seeing strong growth in first time buyers though marketshare remains low

Apple is used to having strong quarters.  However, the recent one brought some bad news, with a major shareholder lawsuit pending against Apple CEO Steve Jobs and other Apple executives.  Still, according to recent analysis Apple will be able to take comfort with strong sales.  Apple's quarter, which ended in June, was a strong one for Mac sales according to BMO analyst Keith Bachman.

Mr. Bachman predicts that Apple will announce shipments of 2.4 to 2.5 million Macs over the three-month period.  If his prediction holds true, it would represent another strong gain of 39 percent over last year.  The industry as a whole saw growth over last year -- 12.2 percent on average -- but the estimate would place Apple's growth at 3.2 times the industry average.

A variety of factors have influenced the strong sales, he says.  One major factor is pricing.  A payment of $1,300 will get you a 2.4GHz MacBook, only a hair more than the average $1,292 paid for a 13-inch notebook.  Typically the MacBook is faster, according to Mr. Bachman, than this average notebook as well.  At other price levels and configuration he says Apple trades storage for speed, but manages to attract certain customers.

Traditionally, Apple's prices have been much higher that comparable PCs.  However, Apple has been more aggressive with its pricing of late, thanks in part to its adoption of more affordable Intel processors.

Unsurprisingly, the other major cause for the adoption according to Mr. Bachman is consumer mistrust of Windows Vista.  While Vista has struggled greatly in the business sector, consumer adoption has been kinder to it.  However, according to Mr. Bachman, there is still a strong public perception that Vista is substandard in bugs and performance and that Apple computers are less problematic, simpler, and more secure.

"Thus far, user satisfaction ratings for Vista have been weak, and startup times for Vista have been known to be much slower than the Mac OS X," he says.  "Thus, more than 50% of recent customers buying Macs in Apple retail stores are first-time buyers."

While Mr. Bachman may well be correct, one small irony is that most security experts consider Apple to be the inferior of the two OS's in terms of security.  Nonetheless, Microsoft suffers from an image problem in which many people mistakenly believe it to be less secure, thanks in part to clever marketing campaigns from Apple.

Strong growth is projected for 2009 by Mr. Bachman as well.  He says that he sees Apple growing shipments another 26 percent, yielding a worldwide marketshare of 3.9 percent.  He says that the new MacBooks coming in August, the iPhone 3G's halo-effect (people buying Apple products to work with their new Apple-brand music player/phone), and planned retail expansion will all help Apple's success going.

Interestingly, Mr. Bachman predicts a shortage of the iPhone 3G.  This may limit Mac sales and hurt the iPhone sales rates, but he says it would project an image of warm reception.  He states, "We believe it is quite possible Apple will run out of phones, post the July 11 launch [but] in the month of July, given some recent production yield issues.  However, we believe that Apple will be able to catch up with phone demand during the quarter. Hence, from a stock perspective, near-term lack of availability issues could end up being positive... with headlines reading something akin to near-term demand outpaces supply."

Could Apple have an intentional shortage up its sleeve?  The move would be questionable, but coming from Apple it might be unsurprising.  Whether you are a critic or fan of Apple, it’s hard to debate that time and time again Apple has lured customers with clever marketing and to as much emphasis on form as function. 

While Apple will need many more years of growth and strong sales to even begin to approach the marketshare level of PCs, it seems on course to at least continue to make its unique splash on the computer market.





"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation







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