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Windows Vista to hit Apple's share

Analyst predicts Mac market share will slip

A surge in Vista-driven PC sales will temporarily dilute Apple's share of the computer market, according to a financial analyst - even though his own survey of a US electronics chain found most stores have sold fewer copies of Windows Vista than expected.

In a note to investors, Piper Jaffray & Co analyst Gene Munster said that the pent-up demand for Vista will put more Windows-equipped PCs in customers' hands in the January-March quarter of 2007. That, in turn, means Apple's share of the market will slip slightly, from 2.5 percent in December 2006 to 2.3 percent in March 2007.

Even so, Munster found that of 50 Best Buy stores in the US, 80 percent had sold fewer copies of Vista than they had anticipated. Still, 72 percent of those stores claimed that Vista is driving PC sales. Furthermore, research firm NPD said demand for Windows Vista during launch week was significantly below that for Windows XP during the latter's first week on sale.

The Mac market share dip doesn't necessarily mean Apple will sell fewer computers. Instead, Munster said that the Vista-boosted uplift in overall PC sales gives Apple the opportunity to sell even more Macs.

"As PC buyers consider upgrading to Vista, which in many cases involves the purchase of a new computer, Apple is recognising its opportunity to gain mind share with consumers," Munster said in his report. "The company views this season of Vista-related computer purchases as an opportunity to sell more Macs."

In its most recently reported sales figures, Apple said it had sold 1.6 million machines in the last three months of 2006, virtually the same number it sold in the previous three months.

Later in 2007, Munster said Apple will reap rewards from the release of its new operating system, Mac OS X 10.5, known as Leopard. The new operating system, tagged with a vague release date of spring by Apple executives, will add $130m in revenues to the quarter ending 30 June, said Munster.

"Assuming a late April launch, this would lead to Leopard shipping 2.6 million copies in the first month of availability and adding $456m to FY07, shipping about 9 million copies in the first year," projected Munster. By comparison, Apple listed revenues of $347m in the last quarter of 2006 under the "Software, Services and Other Sales" category.

Munster predicted that 40 percent of Mac users will upgrade to Leopard, a figure similar to the percentage that moved up to Mac OS X 10.4 Tiger when it rolled out in April 2005.

Munster also said that in the long term, Apple is well placed to boost its market share, especially because of its strength in laptop sales, a part of the hardware pie that has been growing most rapidly. "We are confident that Mac market share will rise; as the PC market shifts toward portables, Apple's market share will benefit from higher share in this category."

In the last three months of 2006, for example, Apple sold 969,000 portables and 637,000 desktops. The number of Mac laptops sold jumped 65 percent over the same period the year before, while desktop units sold dropped by 4 percent during that same time.


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