Apple Now Firing on All Cylinders

[Sunite]

Apple Now Firing on All Cylinders
By Richard Koman
October 22, 2007 11:28AM

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With Gartner and IDC predicting that Apple will be the No. 3 PC seller, substantially behind HP and Dell, analyst Greg Sterling said there's no "single explanation" for the Mac's resurgence. The shift to Intel chips is one factor, Sterling said, as it gives business users the option to run both Windows and OS X on the same box.

Related Topics
   Apple
   Steve Jobs
   Mac
   OS X
   iPhone
   iPod

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   Stock in Apple spiked Monday morning as the company prepares to release earnings reports at the close of trading. Meanwhile, research firms have concluded that the iPhone is AT&T's top-selling handset and that strong laptop sales have pushed Apple into the No. 3 spot for PC sellers.

The story this quarter is clearly the iPhone, which was released at the end of the previous quarter. On Friday, market research firm Strategy Analytics reported that Apple had sold 1.325 million iPhones in the latest quarter, accounting for 13 percent of AT&T's handset sales. That makes CEO Steve Jobs' latest invention AT&T's top seller and the No. 4 handset in the U.S.

Considering that the phone is restricted to AT&T as a carrier, the strong sales are "surprising," said Greg Sterling, principal analyst at Sterling Market Intelligence. "On the other hand, it's not surprising given the devotion that iPhone users seem to show. It's so different from anything else" on the market, he added.

Staying Ahead of Copycats

The handset market has responded to the iPhone's innovative design by introducing several "copycat devices" with large touch screens, Sterling noted. "While the iPhone has validated a certain kind of direction in handset design, maximizing screen size and putting a lot of functionality into the screen, it's not just the screen," Sterling said. "It's the screen, it's the compact design, it's the resolution, the functionality."

Going forward, the question is whether Apple can keep its innovation lead, Sterling said. "A lot of effort is going toward" catching up to Apple, Sterling said. "The iPhone helped galvanize the inadequacies of most mobile Internet devices." Jobs' decision last week to open the iPhone platform to third-party developers can be seen as a "strategic decision to keep the iPhone ahead," he added.

One question mark in Apple future is the upcoming Google phone and the Mozilla mobile browser, Sterling added. "We'll have to see what Google comes out with," he said.

No Single Explanation for Resurgence

"The Macintosh has a lot of momentum now," Jobs was quoted by the New York Times as saying. "It's outpacing the industry." Indeed, the Gartner Group predicted that shipments of Macs would grow 37 percent to 1.3 million computers, for an 8.1 percent market share. Gartner and IDC predict that after Monday's numbers, Apple will be the No. 3 PC seller, substantially behind HP and Dell.

There's no "single explanation" for the Mac's resurgence, Sterling said. Among the factors: a halo effect of iPod and "to a much lesser extent" iPhone sales, ease of use, a perception that Macs have fewer problems with viruses and malware Relevant Products/Services, and a reputation for service and reliability.

The shift to Intel processors is another important factor, Sterling said, as it gives business users the option to run both Windows and OS X on the same box. "There's the sense that Mac is one side and, literally and figuratively, this mass of gray is on the other side. A Mac is a different product," Sterling added.

The demographics of iPhone sales likely reflect what's happening with laptops and desktops, as well. The bulk of iPhone buyers are under 30 but a substantial proportion are over 50. Similarly, said Sterling, Macs are for "people who care about design and can afford them." It's a style and fashion statement, he said, adding that OS X and Mac's software suite appeal to younger users who are more engaged in multimedia.

"Jobs understood that a change was going on culturally and that the Mac could serve the needs of a younger population that was more sophisticated," Sterling said.