“Even with a recent drop, Apple shares — at 29 times earnings estimates for the current year — still are trading at a premium to its PC rivals. This implies big growth expectations for the company and particularly its computer business, notes Darren Chervitz, research director for Jacob Asset Management, which is long Apple shares. ‘Without the transition, it seemed like all the signs were pointing toward that market share growth,’ says Chervitz, adding that he wonders ‘if this was the best time’ for Apple to move to Intel chips,” Troy Wolverton reports for TheStreet.com
“Analysts have generally praised Apple’s decision to go with Intel. The move promises to lower Apple’s costs, which helps its computer become more price-competitive with rival Windows-based systems. And the move should help the company produce faster and more competitive notebook computers, demand for which is outpacing desktop systems,” Wolverton reports.
“Although Apple has just a small portion of the overall PC market, Macintosh sales constitute the lion’s share of total company revenue. Even a small shift in overall PC market share in Apple’s favor could provide a big boost to earnings,” Wolverton reports. “But the move to Intel-based computers could give consumers pause. A subset of PC purchasers always wants the latest and greatest devices and will avoid buying now if they know something better is just around the corner, says Van Baker, a consumer technology analyst at research firm Gartner. Apple’s transition could well dampen sales for Macintoshes until the new Intel-based ones come out, Baker says.”
Full article here.
MacDailyNews Take: It’s all about PowerBooks and iBooks. Without a G5 for the portables, Apple was in trouble. Now, Apple will be able to erase the processor performance comparisons and compete based on their hardware design, operating system, and applications — all three areas where Apple is clearly beating the competition.
Related MacDailyNews articles:
Newsfactor: Switch to Intel processors might ultimately have little impact on Apple’s market share – June 14, 2005
Intel-based Macs running both Mac OS X and Windows will be good for Apple – June 10, 2005
Can Apple grow faster with Intel-based Macs? – June 10, 2005
Poll shows nearly half of Macworld UK readers surveyed approve of Intel switch – June 10, 2005
Fortune: Apple’s switch to Intel processors to accelerate Windows users switching to Mac OS X – June 09, 2005
Mossberg: Switch to Intel will strengthen Apple and the Mac – June 08, 2005
Apple’s Intel shift could result in market share gain – June 08, 2005
Banc of America: Intel deal ‘a net positive for Apple’ – June 07, 2005
They must do this now:
1. BEFORE the CPU speed becomes a big issue, not after.
2. When everything ELSE is going their way, so they can absorb the costs and ride out the next year smoothly.
Perfect timing.
MDN: “…erase the processor performance comparisons and compete based on their hardware design, operating system, and applications — all three areas where Apple is clearly beating the competition.”
Yeah, as well as price, software availability, corporate culture, and a learning curve (be it however small) where Apple clearly does not.
Don’t look at me, I’ve switched to the Mac, but I want to be fair (lest I be “smug”)
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[“Even a small shift in overall PC market share in Apple’s favor could provide a big boost to earnings,” Wolverton reports]
—————–
I thought an increase in market share was a result of higher sales, not the other way round … mixing up cause and effect (…)
Five years from now analysts will look back and see that this business risk (move to intel) was a masterful move.
Macs will then become the “top dog” in desktop computing world wide. Oh my, then so many Mac folks will lose the elite status of feeling they are smartest kid in the neighborhood.
I still wonder how the DRM rumored to be built in to
the Pentium D’s will affect us Mac Heads …
Anyone got a handle on this ?
MW= much ….
Or is it “much” ado about nuthin ?
The real IT world will have fully embraced .NET by the time Crapple get’s their first MacIntel released.
Silly Mac zealots, Microsoft has already won the War.
©
Just suppose the people who are waiting for the latest and greatest defer their purchases until 2006-early 2007. In the case of Apple, without Intel chips, the sales in those years would suffer greatly. Perhaps the stock market already reflected this future sales disadvantage, which has now been erased by the Macintel announcement.
For the present, there are always people who will put off computer purchases until the new machines are way better than the present ones. Buying a G5 desktop is not much of an option now and would be less of an option in 2006 or 2007, simply because the computers would be almost no better than they are now, unless things change. All Apple has to do is keep lowering the prices of its desktop machines if they see the market share drop off drastically, but that won’t happen because businesses are going to move over to Tiger now so they can fire their computer security staff, train their ignoratii, and cut their “help staff” costs…
So the people who wouldn’t buy a 2.7 G5 (or even a 3.0) now are not going to stop buying them in the next few months, because they would do so anyway unless they really needed new machines, as opposed to want.
As for the laptops, as far as Apple customers are concerned, it’s not an option to buy an Intel based laptop right now because Windows is simply not digestible to a present Widgets addict who can’t file his files properly.
Where this leaves us all is the same place we were before the announcement, except that at least in 2007 there is a solution. There wasn’t one before.
Where does this leave the stock? Down, good time to buy for the cogniscenti. Carpe diem!
Sputnik: “The real IT world will have fully embraced .NET…”
Yeah, I heard about this. The real IT world will be MTV’s greatest reality show to date.
Like with any big decision, it’s either a good idea, or it isn’t. The options and risks have to be weighed and there are never guarantees.
This transition, though is coming at a time of company strength. If Apple didn’t fold years ago when things were lousy, they’re not going to fold now. I know they’ll have my business as long as the OS stays strong. Plus, I’ve switched five people– all within the last year. In their own words, they’re not going back to Windows either.
Change: bring it on!
Absolutely. Now is the perfect time for exactly the reasons stated at the top of this thread.
This article makes mention of the price of Intel chips and how, supposedly, Macs should be able to become less expensive because of this switch. Is there any proof of this? John Gruber had an article on his Daring Fireball site that mentioned how IBM and Motorola charge less for their chips than Intel does ( http://daringfireball.net/2005/06/intel_apple_odds_and_ends ). Perhaps Apple was able to negotiate a better price, but I’d have a hard time believing they could get a better price than Dell or HP. I’m a little dubious about these comments because if they’re written enough by people who are merely speculating but really have no idea, it might hurt Apple when the new Intel-based Macs arrive with the same price tag that the PowerPC versions had. History has shown us that shoddy journalism has been as big an enemy to Apple as any.
Sputnik, thanks for playing the Peecee villan all these years, but your fake comments get old quick.
Get over it. Shut up already, thanks!!
It always amazes me how people equate the Intel move with an Apple price drop. Not going to happen until Apple is Microsoft or Dell, with full ramifications. While they are a niche player, they will be innovative and will strive to keep their product line ‘elite’, with higher build quality (at least in terms of materials) and better design.
Higher costs of OS research and development are also included in the price of admission (unlike on the Windows side, where that cost is spread over a much greater number of units).
The Mac will be more expensive until it becomes cheaper. And when it does, it will lose both its innovative edge and quality. I would rather it stay successfully at 15-20 percent of market (with adequate developer response and software production)than see it become 80% and Dell-ified.
Remember the old car rental ads? I think it was Avis (could be wrong, though) who bragged about not being Number 1 because “We try harder”. There’s truth there.
MW: MILLION. Wish I had one.
Apologies for my last outburst – my boyfriend dumped me last night.
And im itching for cock!
Without the Altvec, how will Apple keep their competitive edge in the music market? One would assume that the number of recordable tracks in Notataor will drop when using a non Altivec processor. The number of tracks recordable on a dual G5 system is phenominal compared to Windows PC systems running Cubase.
Sputnik:
The recent credit card security debacle has been carefully managed so that we can’t know exactly which OS was hacked. However,it was stated that the breach came through a web application…perhaps .Net? It is only a matter of time, as .Net invades more and more commercial systems, before major problems crop up. Thanks Microsoft.
My clients are still buying current Macs because: they have new employees starting and they have aging Win98 that they’re replacing with Mac mini’s. None of the conversion issues affect these needs.
Plus, if my kids needed one for school, I wouldn’t wait a year since they need a Mac THIS year. You can’t muck around with people’s needs.
I don’t know why everyone is always saying the switch to Intel is going to result in cheaper prices. It might have a small effect but a chip alone doth not a computer make.
Mac are ALREADY pretty competitively priced when compared to higher quality wintel machines. No, they don’t scrape the bottom end of the pricing sector but I can tell you right now I would MUCH prefer they retain quality than make the compromises necessary to compete in that arena. Super penny pincher windozers have got the Mac mini if they want to go bare bones. Apple shouldn’t lower their standards to play in this cutthroat market. A quality machine deserves a reasonable price.
MDN: “Now, Apple will be able to erase the processor performance comparisons “
Yeah, great, now everything will be Intel slow…
Wall Street never looks beyond a business quarter. Woe the day Apple makes decisions on its technology based on satisfying Wall Street. Professional traders are notoriously myopic—what is the bottom line NOW? They don’t care about Apple being around and strong 3 years from now. They want improved earnings today, tomorrow and next week. Beyond that, they will probably be out of AAPL an onto another speculation. As a long time Apple user, I’d rather see them take steps such as the Intel change to maintain viability years into the future than to stand pat just to squeeze out a better P&L this qtr for Wall Street.
if MS already won the war, why are mac sales on an increase? no, to have won the war would be more like the itunes model-it originally had around 70% market share, and it now has what, 82%? over time, IE usage is going down, firefox is going up (not to mention safari usage), there are signs….pay attn before commenting and sounding like a (insert favorite insult).
Sputnik, get a life and get out of this site. I can be rude sometime but I don’t use profanity. Today, you sink to new low making nasty gay reference. It gets really old copying and pasting the same old lines about MS and .net thing everyday!!! Even if you are just making sarcastic joke about “the real IT world”, you are getting annoying and your story has become tiresome. Get the hell out!!!!
This is a good time for the transition. Apple had to sacrifice near term sales for improved long term prospects. The old Apple without SJobs would have ridden PPC into the ground and crashed in a couple of years after Intel popped out the new processors. The new Apple actually planned for this possibility by maintaining parallel development of OS X on Intel and also generatin g a new, independent revenue stream with iTunes/iPod. Apple has a stronger reputation than ever and is well positioned to ride out any dips in Mac sales during the transition.
The more I reflect on the past five years the more impressed I am at how Apple has been managed (with the exception of effective advertising).
Where’s Triumph?! I miss that little doggy 🙁
Funny how a while ago there was only iPod revenues at Apple….
It’s NOT just about Powerbooks and iBooks! Yes, portables are the growth market, but they aren’t the only market by a long shot. Plus, looking at the technologies involved, there isn’t anything Intel is doing that gives it insurmountable advantages in low power. Other companies (IBM, Freescale) WILL catch up, using & improving upon the same techniques Intel is using, at which point overall performance will again become the primary issue. And I just don’t see ancient x86 as the winning horse in a long term race against PPC and it’s possible Cell progeny.
In fact, when it comes to performance, Intel isn’t even leading the x86 pack right now, and has no design on their much vaunted ‘roadmap’ that indicates they will in the future.
Meanwhile, everything the author or the article is talking about is a real danger for Apple. Losing market share via the Osbourne Effect is like shooting the goose before it’s finished laying the eggs. iPods will have to carry the load for 2 years, and that’s a long time in the consumer electronics space. iPod-chic may already be peaking, and the possibility of some new ‘gadget’ coming out of left field to steal it’s thunder further is ever present.
My opinion is that sales momentum is a precious commodity in any industry. It should never be squandered without certainty of benefits down the road. There may be a possibility of Apple leveraging x86 to give the Mac OS better traction against Windows, but Jobs has never demonstrated the stomach for the tactics nessesary to make that happen (i.e. selling the OS as a standalone product). Absent that, technology advantages are paramount and, from what I can see, Intel provides that high ground (and only in the low power arena) for not much longer than a year or two, at most.
I think Apple made a mistake.