Smartmoney.com article sounds stupid about Apple’s ‘iPod Halo Effect’

“On the eve of its fiscal third-quarter report, it’s hard to deny that the Cupertino, Calif., company has become better known for its massively popular iPod music players than its Mac line of computers. You do remember the Mac, right? Of course, the iPod is proving to be a thoroughbred of a product, so it’s tough to criticize Apple. Since the device’s launch in fiscal 2002, more than 15 million have been sold, much to the dismay of rivals like Creative Technology, Microsoft, Dell, Napster and Sony. In the process, Apple changed the face of an industry and beat more-seasoned consumer electronics companies at their own game,” Monica Rivituso writes for Smartmoney.com.

“My concern is that Apple’s impressive revenue growth of late has been fueled primarily by robust iPod sales. Of the $3.24 billion in revenue the company booked in its fiscal second quarter ended in March — a 70% jump from a year earlier — 31% came from the iPod line. That’s up from 14% in the second quarter of 2004. By contrast, sales from Apple’s Macintosh line of products (which tout better gross margins), accounted for 46% of total sales in its fiscal second quarter, down from about 60% a year ago. This counters some of the talk that Apple’s iPod is creating a ‘halo effect’ in boosting demand for Macs,” Rivituso writes.

MacDailyNews Take: It only would counter the talk coming from idiots, Monica. You’re looking at the wrong numbers. Percentage of Apple’s revenue is meaningless when looking for evidence of the “iPod Halo Effect.” The only question that really matters: are Apple selling more Macs? Why, yes, they are: Apple sold 1.07 million Mac units last quarter, up from 749,000 for the previous year’s quarter, a 43 percent increase in Mac sales year-over-year. It was also the second-straight quarter in which Apple sold more than 1 million Macs. The “iPod Halo Effect” is real and there’s your proof. Perhaps this article was meant for Stupidmoney.com, instead?

Rivituso continues, “Count on hearing lots about how educational sales are expected to ramp in coming weeks and how the latest version of its operating system is faring [when Apple releases quarterly results tomorrow]. Apple started shipping Mac OS X version 10.4 in March. With heartier multimedia features and innovative advances, such as a new desktop search tool called Spotlight, analysts are talking favorably about sales. Solid OS sales would definitely help Apple’s fiscal fourth and first quarters, and help remind investors that the company makes more than iPods.”

Full article here.

MacDailyNews Take: Smart investors already know that Apple makes more than iPods.

Monica Rivituso’s email address is:

[UPDATE: 10:02pm EDT: added article author’s email address.]

Related MacDailyNews articles:
Comprehensive survey shows ‘iPod Halo Effect’ is increasing Apple Mac sales, market share – July 12, 2005
SG Cowen survey shows evidence of a significant iPod halo effect boosting Apple Mac sales – July 12, 2005
Analysts expect Apple to post $3.33 billion in revenue for Q3-2005 on July 13 – July 07, 2005
Merrill Lynch: Mac sales ‘appear robust,’ expects futher evidence of ‘iPod Halo Effect’ – July 07, 2005
BofA raises Apple earnings estimates, forecasts 5.4 million iPods, 28-percent Mac growth for quarter – July 07, 2005
TheStreet.com dubiously concludes that iPod demand has slowed, could impact Apple earnings – July 06, 2005
J.P. Morgan raises Apple estimates based on ‘more optimistic’ Mac shipments – July 05, 2005
First Albany raises Apple earnings, sales, iPod forecasts, cuts Mac mini forecast – July 05, 2005
Apple to webcast third quarter 2005 financial results conference call on July 13 – July 05, 2005
RealMoney: Apple’s iPod Halo Effect ‘quite profound,’ Macs taking good market share from Wintel – June 27, 2005
Morgan Stanley: Apple’s ‘iPod Halo Effect’ is ‘roughly double what the market expects’ – March 18, 2005

20 Comments

  1. “Smart investors already know that Apple makes more than iPods.”

    True, but sadly, I think most investors aren’t of the smart variety. Monica does have a point here.

  2. …she’ll only be happy if the % of Apple’s revenue from iPods goes up, AND at the same time, the % of Apple’s revenue from Macs goes up?

    That’s some interesting math!

    I guess if you have two wildly successful product lines, they had better be exactly EQUAL in their success, or else they are failures ” width=”19″ height=”19″ alt=”smile” style=”border:0;” /> Can’t have one product line growing fast while another grows even faster, now can we?

  3. Yeah the way she used her stats is all screwed up, just like saying:
    35% of accidents are alcohol related. Therefore 65% of accidents happen to sober people. Therefore it’s best to have a drink before taking your car!

  4. The article says “Apple started shipping Mac OS X version 10.4 in March.”

    By shipping, does she mean the copy he snagged off of BitTorrent? I seem to recall that Tiger was “unleashed” the same day as “Hitchhiker’s Guide to the Galaxy” (4/29/05)…

    MDN Magic Word: similar…This crap is similar to what comes from John Dvorak et. all.

  5. This is what passes for analysis? iPod’s share of revenues goes from 14% to 31% while Mac revenues goes from 60% to 46%? Is this a joke? We’re talking about the same company here.

    iPod is made by Apple. Macs are made by Apple. Apple by definition cannot make more than 100% of the revenue that it makes. If something goes up, something must come down so that it all adds up to 100%. This is obfuscation by meaningless statistics at best or a plain lack of understanding of elementary school math at worst.

    Hello, Monica! It is possible for both iPod revenues and Mac revenues to grow by leaps and bounds in DOLLAR terms. There is nothing wrong with the fact that iPod revenues just happen to be growing by Hulk-like leaps instead of Olympic athlete-like jumps. Just because Mac revenues as a percentage of Apple’s overall revenues is going down DOES NOT MEAN Mac sales are also down. In fact, the opposite is true.

    If only these high-paid analysts actual understood basic math instead of plugging them mindlessly into a pre-built spreadsheet and reciting the output by rote.

  6. “The “iPod Halo Effect” is real and there’s your proof.”

    Still a “no” on that one, boys. You can not infer any cause/effect relationship between iPods and Mac sales.

    There are confounding variables:

    Microsoft security woes.
    Apple stores.
    Design awards.
    Final Cut Pro.
    Logic.

    All of these have contributed to Apple’s current success with the Macintosh.

    You will have to show me proof that in the mind of Joe Sixpack, iPod = “I should buy a Macintosh computer”. You’ll have trouble.

  7. Billydude, that was one of the funniest quotes I’ve ever read on here. I nearly spit my diet Pepsi all over my Apple Bluetooth keyboard. Unless you’ve trademarked it, do you mind if I use it when someone presents some idiotic statistic to me?

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