Holy Halo Effect! Analyst predicts 100 million iPod sales by 2008 – Windows to Mac switchers coming?

A leading Wall Street analyst expects 100 million Windows users to own iPods by 2008. In a 27-page note released to clients, Needham & Co. analyst Charles Wolf revealed that, when such critical mass is achieved, ‘Mac sales could surge if only a nominal fraction of this group make a purchase,'” Jonny Evans reports for Macworld UK. “While Apple has remained tight-lipped concerning claims that it intends releasing a flash-based iPod, Wolf says: ‘Although we expect hard drive players to capture an increasing share of the portable music player market, flash players should dominate the market through 2006.'”

“Wolf’s analysis and raised target price are not dependent on an iPod halo effect, nor on Apple maintaining an 80 per cent share in the hard drive-based music player market and 70 per cent of the music download market. Nor does it depend on any future iPod flash product release,” Evans reports. “Wolf also describes Apple’s online and brick-&-mortar retail stores as ‘the unsung heroes of the Apple story.’ In fact, Wolf’s account relies on the assumption that a truly competitive product will debut on the market, and that Apple’s share will slide to 60 per cent. He predicts that Apple will be able to compete with that future challenge on price, because it will be able to benefit from economies of scale, attracting lower production costs than competitors can access, due to iPod’s massive sales volume.”

Evans reports, “Microsoft argues that consumers want choice in their online music purchases, and will eventually favour non-Apple devices. Wolf declares that the Redmond company’s assessment, ‘ignores reality.’ Wolf does not believe music lovers care about music formats when they buy songs, and that most songs are ripped from CDs or downloaded elsewhere. He argues that consumers don’t care which online service they use, as long as it has what they want and is compatible with their device, and adds that content will not drive a single standard service to emerge, as music content will be identically-available on multiple services. ‘There are no compelling economic reasons why Microsoft’s Windows Media Audio music software platform should end up dominating this market just because it’s been adopted by a host of online music stores and music players,’ he writes. ‘In our opinion, the only way Windows Media could emerge as the dominant platform is if Apple stops innovating its iTunes software and the iPod,’ he states.”

Evans reports, “Next year’s outlook remains positive, too, Wolf writes: ‘We’ve adjusted our fiscal 2005 revenue model to incorporate iPod sales of 13.3 million units, up from 9.5 million previously. Confirming that Apple has successfully transformed itself into a $10 billion company again, Needham & Co presently predicts Apple to reach 2005 revenues of $11.7 billion, up from the $10.2 previously assessed. ‘We’re forecasting iPod sales of 23.5 million units in 2006,’ Wolf adds.”

Much, much more in the full article here.

MacDailyNews Take: Now factor in 13% of Windows iPod owners switching to Macintosh. How much is that worth? Get ready to help people out as they switch, folks, because there is about to be a big influx of new Mac OS X users. And that’s a Very Good Thing.™

Related MacDailyNews articles:
Needham & Co reiterate ‘buy’ on Apple Computer, raise target price from $43 to $62 – November 24, 2004
Analyst: iPod ‘should spur sales of iMac, this is just the beginning of a ramp for Apple’ – November 23, 2004
Survey: 13% of iPod owners have switched, plan to switch to Mac from Windows within 12 months – November 22, 2004
PiperJaffray raises price target from $52 to $100 on Apple shares – November 22, 2004

22 Comments

  1. I remember watching a tv interview with Steve Jobs a couple years ago, and the interviewer was asking Mr. Jobs what he was going to do to save floundering Apple. He said that they were introducing some consumer products in addition to computers. He showed her an iPod. She said “That’s it? That’s all you have”

    I wish I had a copy of that interview to play for her now.

  2. Alec:
    He showed her an iPod. She said “That’s it? That’s all you have”

    OMG!!! That is toooo funny!

    I wish I could read that online somewhere… but watching it on TV would be great too…

  3. i will admit when apple released the first iPod, I didn’t think it would sell cause of the high price and didn’t think it was attractive. Now at the time I loved everything apple did still do but I just didn’t get it…or maybe its cause I was only 16 at the time. But congrats to them, it was the perfect business move in every way! They are so smart. and iPod Socks are gonna be a huge hit, I know I want them.

  4. EGADS…

    are we gonna be talking about that 13% number alot from now on? 13 million Mac users that switched because of the iPod Experience by 2008?

    Wowza.. Oh yeah.. and QT will probably spank WM and.. yeah.. the Store..

    Even if none of this comes true.. the fact that the analysts said it means Apple is gaining mind share through these (slightly) more affordable devices..

  5. Let’s assume, demand for Apple products will soar. Compute with the fact that Apple rarely can meet increased demand.
    Our used Macs will be worth a fortune! Positions on the waiting lists will be trade objects. People will hoard cash to buy Macs on the black market. Microsoft will market its “operating system” as MaxOS to at least sound similar. Super Bowl Sunday will officially be renamed Macintosh Sunday. The world …
    Dammit, I have to cut down on coffee!

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