“[Will Apple] launch an entry-level PC that would sell for less than $500, about $300 less than its current cheapest model and $800 less than the flagship iMac? Analysts have been predicting that the iPod would generate a ‘halo effect’ in which consumers drawn to it would discover and start buying Apple PCs as well. With the Apple brand soaring, the moment to strike could be now,” Scott Morrison reports for The Financial Times.
“Some analysts argue that new customers who buy a ‘headless Mac’ would learn to appreciate Apple’s OS X operating system, which is widely considered superior to Windows, Microsoft’s operating system that has been battered by viruses and spyware. Those customers would be more inclined to stay with Apple PCs as they moved upmarket,” Morrison reports. “However, introducing a stripped-back Mac would carry significant risks. First, the company would enter a cut-throat market in which the competition is fierce, the margins razor-thin and where only Dell has shown itself capable of racking up consistent profits.”
“Apple would have to sell millions of machines, a potential problem for a company that has been unable to keep up with demand for its products. Also, new PCs might hit sales of Apple’s more expensive machines,” Morrison reports. “The mood is expected to remain upbeat on Wednesday with Apple’s earnings, which analysts expect will easily exceed expectations, largely as a result of brisk iPod sales. Laura Conigliaro, analyst at Goldman Sachs, estimated that iPod sales would account for about 33 percent of Apple’s $3.2 billion quarterly revenues, up from 23 percent in the previous period. The iPod also helped drive higher consumer traffic at the company’s 102 retail stores, prompting Goldman to forecast that the stores would account for 18 percent of overall sales, up from 16 percent three months earlier.”
Full article here.