Study questions 'iPod halo effect'
updated 03:05 pm EST, Thu November 17, 2005
\'iPod halo effect\'
Apple's small rise in marketshare over the past few years may be more about ratios and numbers than due to the "halo effect." A new study on Apple's Mac marketshare, saying that the often-touted halo effect may be a "misguided" theory at best, according to a report by Roger L. Kay, founder and president of Endpoint Technologies Associates. The report, issued late late Wednesday, contends that Apple’s recent rise from 1.8 percent market share worldwide to 2.5 percent in the second quarter had more to do with how far Apple had fallen rather than any "belated halo cast by the iPod." The report notes that Apple’s market share has fallen slightly in the third quarter to 2.4 percent, which bolsters arguments by those who question the iPod halo effect.
"No Sherman's march to the sea here," said Kay. "The argument against the halo effect says that while Apple's shipments have been up for the past four quarters, it is because they are coming off historic lows. And we are now in an upgrade cycle in which the Apple faithful buy new systems."
"Apple's share has risen from 1.8 percent in 3Q04 pretty steadily, albeit in baby steps, up to a high of 2.5 percent in 2Q05. It is not easy to determine whether this rise is due to a halo effect or just represents the normal cyclical of Apple users upgrading, which they do every few years," Kay said.
Apple's position remains below where it was from 1997 through the middle of 2002, and Kay said that it is in this "unenviable" position due to the fact that "its products have become increasingly less competitively priced and have lost their advantage over PCs in features and functions."
While Apple's rise in the market is real, the report says that the halo effect is illusionary at best. It also said that Apple's future is more clouded that many think, especially after the recent rejection of Mac OS X as the primary operating system for MIT's $100 laptop project.
"From the overall market's point of view, [the halo argument is] a tempest in a teapot," said Mr. Kay. "I believe the company continues to make suboptimal strategic decisions, even as its marketing and short-term tactical execution are astounding. What will trip it up again are the standards and pricing issues." [updated]











'Standards issues'
11/17, 03:40pm reply
??????
JulesLt
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Joined: Jul 2005
Who cares?
11/17, 03:41pm reply
all that matters is the Apple is selling more computers and making more money. The only way to really know if there is the so called Halo Effect is if at time of purchase or registration everyone answers a question asking "If you have never owned an Apple computer, was your purchase influenced by the iPod"
Until that question is asked and accurate date is collected, everyone is just blowing smoke and creating something out of nothing. Again, who cares.
jimster
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Joined: Aug 2005
Another Paid Shill
11/17, 04:03pm reply
If you look at the guy's site, he's a paid analyst who consistently supports competing companies. They pay him to do this. Why MacNN would give him any credence is beyond me.
haveaduff2
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Joined: Sep 2005
Halo
11/17, 04:15pm reply
People around me see Apple as an option for there next computer (especially Mactel) and the iPod is the main reason for this. Everybody is waiting for the Mactel to buy so gaining marketshare in this period of transition is just amazing.
The MIT's $100 laptop was just hint to everybody that osX is going to be licensed to non Apple hardware, not a real proposition. Apple can always freely distribute the osX for MIT on sponsored disks or something if they really want this market. They better make a version for the Sony to, that would rase there marketshare.
Peter Bonte
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Joined: Aug 2001
re: Halo
11/17, 04:45pm reply
I have seen a HUGE spike in interest for Apple hardware. One guy, just today, came into the office excited about his iPod nano purchase. However, he said he had been on the phone with technical support for days regarding his Dell desktop and almost bought a new Mac then and there but wants to wait and save some money first and then buy an iMac next year.
Another guy at work just bought an iMac and yet another is planning to buy one during tax time. There are people in my company (strictly Windows based) who I would never had thought they would be interested in Apple products, yet they are buying them.
This Roger Kay guy deep down knows the iPod is having an effect on ALL Apple products. He's just after his own agenda. Apple, I believe, has planned things REALLY well with the timing of products and is taking advantage of the iPod craze while it lasts. The awareness of Apple as a great solution for computers is rising quickly. Word of mouth advertising for Macs is rising exponentially and things are really going to change in 2006.
2006 is going to be a HUGE year for Apple.
Smurfman
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Joined: May 2001
$100 laptop
11/17, 05:09pm reply
How does being rejected for the $100 laptop "cloud" their future?? MIT decided not to go with them purely because they wanted an open source operating system.
gamato
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Joined: Mar 2005
That's it!
11/17, 05:16pm reply
You got it. Someone writes a negative article about Apple (actually not negative, per se, just more of an analysis), and the mac-heads get all up in arms about someone with an agenda, or being a paid shill. No one cares when an apple paid shill writes positive notes about apple. Nope, just when its the other way.
BTW, there's plenty of truth to his argument as well. People hold onto their macs longer then PC folks (need to, they cost a lot more then those PCs), and are more cyclical in upgrade cycles. I finally bought a G5 tower in April, mainly because I couldn't wait any longer for apple to finally upgrade the little buggers. And let's not forget there may be a buying push now to get your PPC macs before they go intel (one of the other reasons I bought mine, wanted to make sure I kept my precious classic compatibility, and I plan on getting an iMac for my mother sooner then later for the same reason).
Oh, and no one mentions a point in the blurb above, that states apple is still behind where they were just three years ago. Or that pricing is going to be a big sticking point (loved Smurfman's comment about co-worker who was going to buy a Mac, but is saving his money to get one - you need to, considering the cost of all but the most low-end models).
testudo
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Joined: Aug 2001
Kinda Blew it
11/17, 06:03pm reply
I see analyst and think maybe they have some information that might lead them to know something not commonly known, although I really know better. But he says two things, one, the increased sales is due to this upgrade cycle as Mac people do every few years. So, um, what is that? Mac users call each other up and all go to buy their macs in the same quarter? That some how there is the huge in-proportional bubble of Mac users that surges to the market at the same time? That makes more sense than the iPod halo effect? Especially now, when the platform is about to support Mactels, would this be when you'd see this supposed surge of upgrades? And second, and probably more obvious, the comment of MIT rejecting Apples offer to load Mac OS X onto their affordable 100 dollar PC. Please, that was just silly. The way in which this analyst presents it sounds convoluted, like the os was inferior or like it was Apples last remaining hope; an obvious ploy to smear the OS and thereby reveling that this guy has an agenda.
slider
Mac Elite
Joined: Oct 1999
Paid Analysis
11/17, 06:53pm reply
Hahaha! Another negative article on Apple from Roger Kay? You don't say. How shocking! Boy, that article of his on the "end of the iPod fad" 2 quarters ago was dead on wasn't it? Hahahaha! And just before Apple's 3Q earnings call. What a coincidence right? Alot of news outlets picked up on that one and ran with it. Fortune even ran a similar piece on it and everything. Caused APPL stock to drop quite a bit....until Apple's 3Q earnings results came out. Haven't heard another "iPods'last rites" article since.
And Mac users don't hold onto their Macs longer because Macs cost more, but because they don't become unuseable in only a few years like Wintel PCs do. Afterall, the average income of Mac users are higher than PC users. So they can afford to upgrade their Macs anytime they want and they keep their Macs longer because they choose to. And they choose to because Macs just work and they work for a long time. Anyone who uses both Macs & Wintel PCs know that.
vortexlift
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Joined: Mar 2004
Worldwide Market Share
11/17, 09:04pm reply
Here we go again with the semantics. Apple's worldwide marketshare as he noted did not grow very much, agreed. It probably has nothing to do with the "halo" effect. On the other hand, Apple's US market share has grown considerably more than 0.n%. For example in 3.2% 2003 (total) compared to 4.7% in Q2 2005 (with some predictions that Apple will hit 5% overall in 2005. That says something.
ratpH1nk
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Joined: Aug 2005