“Some had begun to consider Apple Computer Inc. irrelevant. After five years of no growth in its Macintosh business, California-based Apple’s share of the worldwide personal computer market had shrunk to a paltry 2.2 percent. But now analysts are having second thoughts about Apple’s relevance, because it appears music may save the company from oblivion,” Steve Alexander writes for The Minneapolis Star Tribune.
“Apple’s rescuer is the iPod, a palm-size digital music player with a tiny computer hard drive that puts an entire music library in your pocket,” Alexander writes. “The iPod is so popular with consumers that some analysts now believe it carries a “halo effect” that will help Apple move its computer business off dead center. Apple’s Macintosh sales grew twice as fast as the overall personal computer industry’s sales in the first quarter, a surge that coincided with record iPod sales. And the company just introduced a new low-cost Apple, the Mac Mini computer, which has iPod-like characteristics.”
Alexander continues, “‘We are big believers in the iPod halo effect,’ said Gene Munster, a senior analyst at Minneapolis-based Piper Jaffray… If Macintosh computer sales continue to rise along with iPod sales, it could increase Apple’s share of the worldwide personal computer market to as much as 4.5 percent by the end of 2006, said Munster. That may not sound like much, but each 1 percent of market-share gain in the personal computer market is worth about $1 billion in revenue, said Ron Johnson, Apple’s senior vice president of retail… ‘Within two years, there will be 60 million to 80 million hard-disk-based digital music players worldwide, compared to 15 million now,’ Munster said. Because of the iPod’s early success in digital music, ‘we think Apple can sustain its momentum.’ In addition, Apple’s high-volume production of the iPod gives it manufacturing-cost advantages that others will find hard to duplicate, he said. ‘The iPod has given Apple a second life,’ Munster said. ‘Without the iPod, Apple would be irrelevant.'”
Full article here.