Industry analysts examining Apple’s Wednesday earnings statement concurred that the most interesting information revealed was the strong growth of Macintosh computer sales.
As discussed in Apple Computer Inc.’s fiscal third quarter conference call, sales of Macintosh computers have risen 35 percent over the year-ago quarter, which gave the Apple products triple the sales rate of other computer vendors.
“To me, there were two standout numbers” in Apple’s results, said Charles Wolf, a New York-based analyst at Needham & Co. LLC. (Wolf owns shares of Apple stock.) “Clearly, the iPod shipment number was an upside surprise from the consensus estimate,” he said, but added that “more significant were the Mac shipping numbers.”
Wolf said that up until the previous quarter, Mac sales were slow, “But now we’re seeing growth.”
He said he did not know whether the sales increase arose from the so-called “halo” effect from Windows users buying iPods and then buying Macs, or from people moving to the Mac platform due to rising concern over viruses and spyware.
Either way, however, Wolf said, the numbers “would suggest that there are many Windows users switching.”
Similarly, Tim Bajarin, president and analyst for the Campbell, Calif.-based Creative Strategies, said, “You have to give Apple creditthe iPod is doing greatbut the surprise is that Mac sales are up.”
The sales increase can be attributed to two things, Bajarin said. First was that the company was “more aggressive” in marketing its Apple stores, which Apple said should number over 110 worldwide by the end of the year. Bajarin said that the storefront presence not only encouraged people to have hands-on time with Macs, but exposed Windows-based iPod users to Macs, perhaps for the first time.
The second reason, Bajarin said, was that Apple has continued to push its “switch” campaign, though more on a local basis through the stores than through national television marketing campaigns. “Apple has been great in using the stores to push the role of Macs in managing digital lifestyle issues,” he said.
Both analysts noted that the increase in Mac and iPod sales came during a quarter that is traditionally a slow one. Wolf said that many analysts, seeing that the rise of iPod sales was slowing, did not take this into account, as well as the fact that the jump from the third quarter of 2004 through the first quarter of 2005 was “dramatic.”
“The reality is,” Wolf said, “once sales go over 5 million, sales will slow.” He added that Apple’s iPod sales are “continuing to grow, just more slowly” due in part to the larger base of iPod owners.
Wolf said that he does expect Apple to take a hit in Mac sales due to its recent announcement that the entire product line will be moving from IBM to Intel processors.
He said that this will not be anything out of the ordinary for Apple, however.
“We see [customers holding off on purchasing] in the installed base whenever a new product is on the way,” he said.
“My best guess is that this will be a March quarter phenomenon,” he said, adding that this guess is based on Apple introducing Intel-based Macs around June 2006.
However, Wolf said, this pause will have little or no long-term effect on Apple financially. “All you’re doing is moving sales from the March to June quarter,” he said. He added that the new products might actually boost net sales, enticing computer users more familiar with the Intel name.
Overall, Wolf said he is optimistic about Apple. “Apple’s revenue growth could sustain a rate of 15 percent increase over the long term,” he said, “and Mac sales will continue to exceed those of the market for an indefinite time to come.”