Hey, where’s my Apple halo?

by Mathew on June 2, 2006 · 4 comments

Remember the “halo effect?” That was the term some analysts came up with for the boost in Apple sales that was expected to result from the smash success of the company’s iPod music and video players. The assumption was that all the love for the iPod would spill over onto the rest of Apple’s business, and that people would be drawn to purchase more Macs and iBooks and so on. There were several articles and analyst reports last year that said the effect seemed to be working — but now there are numbers that call those early reports into question.

According to the latest report from Gartner Group — obtained (ironically) by Apple Insider — Apple’s worldwide market share actually dropped in the first quarter of this year, to 2 per cent from 2.2 per cent in the same quarter of 2005. Even in the U.S., the company’s primary market, its share barely budged during the quarter, remaining more or less flat at 3.6 per cent (Gartner says the company’s share rose by one-tenth of one per cent). Even if you assume that lots of people held off buying because they were waiting for the new Intel models, that’s still not a great performance — and not much evidence of a halo.

If you’re wondering why it’s ironic that the Gartner report shows up on Apple Insider, it’s because the blog was one of several that were sued for leaking inside information about Apple products — a lawsuit that Apple just recently lost. Could Apple Insider be feeling a bit of what the Germans call schadenfreude?

  • Frank McMillan

    Worldwide market share down? Well, yes it’s a shame Apple can’t count grocery store cash registers and the like as units sold like the PC world does. More indicatively, Apple’s Mac sales are up all across the board, as are their profits. Stock value continues to grow unlike stagnant Microsoft.

  • Mathew Ingram

    Thanks for the comment, Frank — and for the point about the cash register thing. And it’s true that Apple’s share price continues to grow, but I would argue that it is doing so in part because people believe that the halo effect is real.

  • Roger Harris

    Hi Matthew,

    I am very surprised that Apple has not been able to take a larger share over the last few years. People’s tolerance for the devil they know is much greater than I could have imagined. It seems that IT people, programers and the technically inclined find the switch to be easier. This is the opposite of what I would have guessed.

    I started on Windows in 1991 and did Windows for five years before buying a Mac. I did some moonlighting at a company with Mac and Windows; after 3 months I didn’t understand why anyone used Windows. Windows 95 was the end for me; I bought a Mac. At the company I worked, I was involved in purchases and through pricing found that on well equipped computers the Mac was often less expensive than comparable PC clones. For us support was less than a third as on Windows PCs. I can only guess that Apple being run so poorly at the time, allowed a great loss of market share to a plainly shoddy competitor.

    I think Windows XP is by far the best Windows system they ever made and usually works well enough to keep people from switching. The malware problems should have set a lot of folk to Macs but as I pointed to, people have a higher pain tolerance than I would have guessed. I don’t know what else Apple can do to gain market share. A 5 to 7 percent share would be nice but, If insanely low prices or corporate sales are the only answer then higher share is not worthwhile.

  • Mathew Ingram

    Thanks for the comment, Roger. I would agree with you on many of those points, although I have to say that I’ve had a Windows XP machine as my main computer for almost five years now and have had no real problems apart from a hard drive failure, thanks to a secure firewall and regular spyware and virus scans. I think your point about Apple and prices is a good one — it may not be worth it for Apple to pursue higher market share. And as many companies have shown, it is possible to be profitable and successful even with a relatively small market share.

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