Apple iPod sales could accelerate ‘Halo Effect’ increasing Mac’s share of computer market

“Apple will have sold more than 37m iPods by the end of the year, putting it in a position where it really can start enjoying the much-vaunted halo effect that will boost its share of the computer market,” Tony Smith writes for The Channel Register. “So claims senior Piper Jaffray analyst Gene Munster, according to a Forbes report. ‘We expect the iPod to continue to be a foundation for growth in other parts of Apple’s business, and we expect that by the end of calendar 2005 more than 37m iPods will have shipped, providing Apple with a greater scope of awareness for various products,’ Munster told investors this week.”

Smith writes, “Munster’s figure represents overall iPod shipments to date. Apple hasn’t published such a figure thus far – it only began breaking out iPod unit sales when it published its Q4 FY2003 figures in October 2003, around two years after the iPod was launched. Apple’s published numbers for Q4 FY2003 and all subsequent quarters put the total to date at 27.249m, but that’s likely to be short by the three hundred-thousand units we estimate shipped between the device’s Q1 FY2002 launch and Q3 FY2003. Even so, that still leaves Apple needing to ship the best part of 10m iPods in the current quarter, if Munster’s target is to be achieved, which amounts to sequential unit-shipment growth of 46.5 per cent or thereabouts.”

“If Apple does take the iPod sales total to 37m or more, whether many go on to buy new Macs or not, plenty will increasingly turn to the iTunes Music Store for content, driving that aspect of the company’s business further. Munster himself has forecast Apple will have sold 1.365bn songs through ITMS by the end of 2006, allowing the content service to account for five per cent of Apple’s revenues next year,’ Smith writes.

Full article here.

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Related articles:
Analyst: Apple could ship over 37 million iPod units by end of 2005 – November 01, 2005
iPod Halo Effect strikes tech columnist, gets new Apple iBook after fifteen years of Windows – August 23, 2005
Microsoft executives acknowledge Apple’s ‘iPod Halo Effect’ – July 29, 2005
The Street’s Wolverton: Apple’s iPod halo shines – July 19, 2005
Needham & Co: Apple ‘iPod Halo Effect’ fueling Mac purchases; predict 43 million iPod sales in 2006 – July 18, 2005
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
Merrill Lynch: Mac sales ‘appear robust,’ expects futher evidence of ‘iPod Halo Effect’ – July 07, 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
Enderle: ‘iPod Halo Effect is just a myth, same thing as having Paris Hilton visit Apple stores’ – May 02, 2005
Microsoft dismisses threat of Apple’s ‘iPod Halo Effect’ – April 04, 2005


  1. Am I mistaken or do Dell’s numbers include sales to business clients?

    If so, then Apple’s sales (not being targeted to car dealerships and restaurants, etc.) figures are even more impressive.

    If Dell’s numbers are for total sales, I wonder what part of that was for sales to individual consumers for home use?

    The market share for “home computers” might be quite a bit higher.


    PS- I updated the new iMac (Rev C) to 10.4.3 and it works great, but I now have an extensive list of permission repairs when I run disk utility. Any thoughts on if this is something to be concerned with?

  2. An iPod that works flawlessly with Windows will not in itself turn anyone to dump windows and buy a Mac.

    An iPod is an affordable, desirable, easy to use and easy to understand gadget that has one (major) function. – Play music on the go. A computer will cost up to ten times that, has to be learned (yes even a Mac) and has a multitude of functions… not all apparent or necessary. (You wouldn’t buy a computer just to watch a DVD)

    An iPod could be an impulse buy. Or a present. Not so a computer.

    A family of 2 adults and two teenage children could easily all own iPods, yet all share one computer.

    A computer will only be replaced when for whatever reason it no longer meets requirements. An iPod could be replaced on a whim.

    Now I’m not saying the ‘halo’ effect is not real. In-fact I believe it will start to snowball. But it takes time, and will only represent a small percentage of iPod sales. To carry the halo effect on, it is important that those that do switch are happy about it… and pass on the message. This will take time. Look again this time next year when present iPod owners are buying replacement computers!

  3. Just a note on Smith’s research.

    He states “it only began breaking out iPod unit sales when it published its Q4 FY2003 figures in October 2003.” This is very true. However, if you look at the Q4 FY2003 figures Apple also followed their normal trend of including the same quarter previous year sales, Q4 FY2002, in the data summary. So following each financial release and checking the previous year’s results we can accurately fill in FY 2003 and some of FY2002.

    Q1 FY2002 – 125k units – MacWorld Expo 2002 Keynote.
    Q2 FY2002 – Unk
    Q3 FY2002 – Unk
    Q4 FY2002 – 140k units – Q4 FY2003 Financials
    Q1 FY2003 – 219k units – Q1 FY2004 Financials
    Q2 FY2003 – 80k units – Q2 FY2004 Financials
    Q3 FY2003 – 304k units – Q4 FY2003 Financials

    I have other keynote information that highly suggests Q2 and Q3 FY2002 were 50k and 60k respectively.

    Therefore, Smith’s estimate of 300k units between Q1FY02 and Q3FY03 are clearly off by more than 500k according to Apple’s financial statements. They sold over that in Q3 FY2003 alone.

    However this doesn’t change the fact that Apple still needs to sell just of 9 million iPods this quarter

  4. Mozfan writes: “I updated the new iMac (Rev C) to 10.4.3 and it works great, but I now have an extensive list of permission repairs when I run disk utility. Any thoughts on if this is something to be concerned with?”

    Not that unusual. I wouldn’t worry about it.

  5. An iPod that works flawlessly with Windows will not in itself turn anyone to dump windows and buy a Mac.


    Windows for normal people is shxt. I’m talking, “My laptop is dead and I have to spend $300 to get my files off the thing” shxt.

    I’ve heard horror stories and I’ve heard of people I know being offline for days, weeks at a time due to viruses.

    Anything that warms them to the Apple brand, means next time they think about getting a computer they’ll be open-minded about Switching. That simple.

  6. mike

    Please re-read what I said.

    I know windows is a botched job.
    I too know countless Windows horror stories…

    However, Apple have done really well to make the iPod and iTunes work (almost) Mac-like on Windows. This in itself though will NOT be enough to make Windows users dump their PC’s, en masse, in favour of Mac’s.

    Add a few hundred viruses, some spyware, several blue screens and stories of trouble-free macs and we might be getting somewhere.

  7. mike: For every one story you make up about Windows users I can tell you about 6 windows computers our family owns (plus my two Macs) and we have zero, none, nada problems with our Windows computers.
    We also have three iPods….all run off Windows computers.
    My Macs are great and I like my Windows computer.
    We have never had a virus on our Windows computers. they are all hooked up to the internet via DSL.

    Why don´t my wife and kids want Apple computers? Games, games, games. Plus our accountant uses Windows tax software adn we have to run it, too.

    So don´t go blowing about Windows sucking so bad. Most people I know have no problems with their Windows computers.

    Yes, I like my Macs and yes my next computer will be a Mac….a Mactel!

  8. There’s a lag time that needs to be considered. Just because I have an iPod that I love, doesn’t mean I am just going to rush out and buy a new Mac. It also depends on when I’m planning on replacing my current computer. That may be 2 years from now. So, you see, the so-called halo won’t fully be appreciated for a while.

  9. Parmer Deville – excellent research, thanks for posting the numbers numbers. I used these numbers off of the financials yesterday to arrive at 28M total iPods shipped in my response to the original post about the Forbes article yesterday.

    Mozfan (Re: Dell numbers) – I would have to agree that if we could look at “Home Numbers”, Apple’s market share would be much greater. Dell’s numbers most definitely include sales to business. In the US, based on their lastest quarterly report, revenue from their US Business segment was about 4.25 times revenue from their US Consumer segment. As a total of revenue, their US consumer segment made up about 12.6% of revenue. An estimate for shipments to the US consumer is about 1.146M computers. Of course the number is probably much higher than this due to lower cost per unit of the consumer purchases vs. business purchases. But I would not be surprised if actual home purchases of Dell computers in the U.S. were under 2M.

    Apple’s share of the home computer market in the U.S. is definitely much higher than their overall market share.

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