MacBook, MBP demand still strong

Apple's MacBook and MacBook Pro appear to be experiencing solid demand, according to UBS Investment Research. That demand lends support to the firm's 5 percent year over year unit growth estimates for Macs in the June quarter, which the company says may be conservative, and could see support from a new student promotion as well as seasonal education spending. "Checks for Apple show that demand continues to be strong for the new MacBooks and the MacBook Pro into June, which should provide support to our estimates for Apple's fiscal 3Q06," UBS wrote in a research note obtained by MacNN. While Apple continues to dominate the MP3 player market with regard to share, checks indicate seasonality of sales for iPods due to a general deceleration in the MP3 player market, according to UBS.

Back to school

"We think a recently announced promotion for students and teachers should help stimulate iPod sales (as well as Mac sales) and continue to expect new iPods next quarter with compelling new designs."

Speaking with store representatives about PC sales, the firm observed that a slowdown during this time of year is in line with expectations, and noted that demand should see a considerable increase towards the end of July and into August, as vendors begin back to school promotions.

"The store representatives we spoke with indicated that they are expecting demand to be rather weak through June and most of July as users wait for back to school promotions, which should help drive demand later in the summer. In addition, a number of store representatives stated that early expectations for the 2006 back to school season are positive with many retailers expecting solid demand, similar to the 2005 season."

UBS store visits and surveys indicated a positive reaction to the new MacBook and MacBook Pro, despite concerns about Apple's transition to the Intel architecture. The education segment should also lend support to estimates, according to UBS, as June is the time that school districts exhaust annual budgets.

"With the education segment accounting for approximately 25 percent of US Mac unit sales, we believe both June and July (when new budgets come into play) could see solid growth, especially for MacBooks and iMacs," said UBS.

Apple's recently announced student promotion, under which Apple is offering students a $179 mail-in-rebate (in addition to the standard education discount) upon purchase of a Mac as well as an iPod purchase, should provide a boost to Mac sales toward the end of this quarter and into the next.

Increased distribution

"In addition to strong demand we have been seeing for the new Macs, we believe increased distribution should also lend support to estimates as Best Buy has begun to carry MacBook, MacBook Pro, Mac Mini and iMac systems on its online store and in six pilot stores."

Best Buy piloted the Mac mini in April of 2005, but has avoided selling other Mac models since 2003. Expanding distribution could have a major impact on Apple's ability to ship Macs, as the Cupertino-based company only operates around 145 stores. Best Buy, however, operates more than 740 stores in the U.S.

"Given the Best Buy MacBook pilot consists of about six stores right now, we are not overly optimistic about short term implications - especially given that pilot programs in the past that didn't yield good results."

Despite the Mac mini's unpopular trial run at Best Buy, the retailer is telling customers to go online to purchase Macs, where the MacBook and MacBook Pro are currently backordered with shipment times of 1-2 weeks.

New Apple offerings

UBS expect Apple to announce new Intel-based PowerMacs by August in conjunction with the company's Worldwide Developers Forum (August 7th), along with a preview of the latest version of Mac OS X Leopard.

"Our checks also indicate Apple is working on 'ultra-portable PC's' and even notebooks equipped with NAND flash memory in addition to or in the place of hard disk drives, which can offer users an 'Instant-On' functionality for booting. We believe these new products could start in notebook products with combo-drives (NAND and HDD) or ultra-portables (NAND only), and could be released in time for MacWorld.

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