Analysis: The resurgence of the Macintosh: Is it real - and can it last?

Cupertino (California) - Stock exchange indexes fell, then rose again, on the news that emerged from Apple Computer. Millions of adoring fans awaited the announcement of new Apple products, during an invitation-only event where thousands had to be turned away. New Macintosh computers were unveiled, on the heels of astounding news that Mac sales were increasing in the US by 45% per year, even as it begins the transition to a new processor platform. And the face of CEO Steve Jobs, emerging like a genie from atop the wide monitor of the new iMac, graced the cover of Time magazine.

What decade is this again?

As we reported on Wednesday, the good news from Apple just keeps coming with the announcement of its first line of quad-core G5 PowerMacs, along with dual-core capability minimum across the product line. This on the heels of news from Apple last 11 October, confirmed by analyst firm IDC, of 45 percent year-to-year unit growth in shipments of Macintosh products to the American market. Although the spotlight continues to be hounded by iPod, the little device that has taken command of the portable consumer electronics market, all of a sudden, Macintosh enjoys what IDC projects to be a 4.3 percent US PC market share, and has its sights squarely set on the magic number of 5 percent.

But how much of the Mac's newly rediscovered success comes from sharing the afterglow of iPod's spotlight? David Daoud, IDC's research manager for personal computing, has addressed the subject of what has been called the "iPod halo effect." Daoud cited iPod shipment figures of 6.4 million units in the third quarter of 2005, up from 6.1 million the previous quarter, and 2 million in Q3 2004. Yet he doesn't believe there's any direct evidence of a direct correlation between iPod's success and Macintosh's, saying that in order for that to happen, Apple would have had to pull off what he calls a "grand piggybacking."

"If you're going to spend $300 on an iPod," said Daoud, "it takes another major leap of faith to spend another grand on a PC." While it's possible that new Mac owners are iPod-catalyzed converts, he said, it's also equally possible that they are existing Mac owners who purchased their systems during Macintosh's last surge of success three years ago, and that they're undergoing a "refresh cycle."

As IDC has reported, the US PC market is growing at an annual rate of 11 percent. While Macintosh's growth rate of 45 percent may seem disproportionate by comparison, Daoud finds it difficult to explain any disproportion on account of market share that Apple is directly stealing from competitors. He says there's no evidence to indicate that Apple's competitors are losing market share, although it's obvious there are fewer of them today than in previous years. Two years ago, Apple's marketing campaign to woo PC users to Mac by way of a point-by-point features comparison, he noted, is generally perceived to have failed. Also, IDC's research with regard to what Daoud calls "mindshare" - which measures relative brand recognition and loyalty among consumers - shows Apple neither gaining nor losing much among converts, but gaining some loyalty among those who already consider themselves Mac followers. Meanwhile, HP and Dell are both also stable in the mindshare category.

A wise but fictional detective is believed to have said something on the order of, once all other possibilities are eliminated, the one that remains, however silly it may sound, must be the truth. What remains for Daoud is the halo effect. "I think if anyone, particularly a company like Apple, needs to expand its user base," remarked Daoud, "they certainly need to be very innovative, in terms of understanding what everybody else wants. In other words, you're not developing a product just so that you'll be liked by your loyal crowd; you need to go beyond."

With regard to "beyond," Daoud refers to this math: Over 12.5 million iPods were sold in a six-month period. "I have to believe that not all of these were 'Apple guys,'" he said, referring to new iPod customers. If Apple can sustain these growth numbers on a quarter-by-quarter basis, he believes, the same proportions may be reflected in the number of iPod owners who visit Apple's Web site to connect to iTunes, and in so doing, end up purchasing Macs.

But which Macs are they purchasing, and does the answer give any clue about the purchasers? According to IDC, 602,000 desktop Macs (including PowerMacs, iMacs, and eMacs) were shipped in Q3 2005, while 634,000 mobile Macs (PowerBooks, iBooks) were shipped during the same period. For the first time, over half - 51.3 percent, to be exact - of all Macs sold were portables. Apple may very well be rebuilding itself into a mobile content company, and portable Macs may be playing a vital role in that transition.

Joe Wilcox, senior analyst with JupiterResearch, does not believe the "halo effect" is a major factor in Macintosh's resurgence. Wilcox credits Apple's 116 retail outlets in the US, plus Apple's extensive advertising campaign in all media. Of course, those ads were for iPods; but in another sense, he believes, they were for Apple. "If people don't know about the company, and don't see the company's products very much," he asked, "how can they buy them?"