iPod owns the music player market, but can Apple sell more Macs?

“Apple’s iPod may be grabbing all the attention these days, but its Macintosh computers are still the key to the company’s continued success, some analysts say,” Troy Wolverton reports for TheStreet.com. “Sales of iPod digital music players have revived Apple’s business over the last two years. But the lion’s share of the company’s revenue and profit still comes from computer sales. For the company to maintain momentum — and its sky-high stock price — the Mac computer line needs to catch some of the iPod’s fire, analysts say.”

“Apple continues to dominate the market for hard drive-based digital music players. In February, the company’s iPods held 89.3% of the market for hard-drive players in terms of units sold at retail stores in the U.S., according to NPD Group. Prior to this year, Apple offered only hard drive-based players, sales of which constitute around 50% to 60% of the total digital music player market. But in January, the company introduced the iPod Shuffle, its first flash-based digital music player. Early indications are that the Shuffle has been a success also, according to market researchers. Apple captured 45% of the U.S. retail market for flash-based players in February, based on data from NPD Group,” Wolverton reports.

“The company has made much of Microsoft Windows users switching to Macs. Meanwhile, a number of analysts have predicted the iPod will have a ‘halo effect,’ attracting users to the Mac platform. But to date, the company has had little evidence to show it’s attracting new Mac users in significant numbers,” Wolverton reports. “‘The iPod is a snowball going downhill: It’s getting bigger and bigger every quarter. The Mac doesn’t have that kind of momentum,’ says one hedge fund manager who is long Apple. ‘I’m hoping that it will develop that kind of momentum. They’ve got to sell more Macs.’ Apple is attempting to do just that. The company is pitching its new cut-price Macintosh, the Mac Mini, to Windows users who are reluctant to switch because of the typically higher costs for Apple computers. And on Tuesday, the company announced that later this month it will begin shipping the latest version of its operating system, which has features not available with Windows.”

Full article here.

MacDailyNews Take: Apple’s Mac sales are already on the increase. Apple closed out 2004 with 3.2% of the U.S. PC market, up from 2.9% in 2003, according to Gartner. In the fourth (1Q05 for Apple) or “holiday” quarter, Apple’s Mac shipments grew more than 25 percent, according to IDC, while the PC market as a whole grew at just 10.9 percent by Gartner’s measure. These numbers were gathered, remember, before the debut of Apple’s new Mac mini. So, it look like Apple’s Macintosh snowball has just begun to roll.

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