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Apple 'switch' rates underestimated?

updated 04:15 pm EST, Thu November 30, 2006

Apple 'switch' rates

Industry watchers may have underestimated the switch rates of Windows users who will purchase Apple systems after Apple unveils Mac OS X 10.5 Leopard with Boot Camp next spring. Research firm Needham & Co. today raised its price target on Apple shares to $115 from $90 to reflect a more 'realistic' reading of the switch rates as a result of the Mac's ability to run Microsoft Windows. "Subsequent events, most importantly stronger than anticipated growth in Mac shipments in June and September, indicate that our interpretation of the survey results that triggered our upgrade was conservative," said Needham & Co. analyst Charles Wolf. The change comes after the research firm conducted a survey in May to measure the possible impact of the Mac's forthcoming ability to run Windows apps on the switch rate of Windows users.

The poll revealed that among Windows users who did not own an iPod, the mean switch rate increased from 3.6-percent when the Mac could not run Windows to 11.1-percent when it could. "In doing so, we implicitly assumed that no Windows users would switch to a Mac unless it ran Windows," Wolf said. "In view of the increasing number of Windows users who are switching even before the Mac can run Windows, this was an unrealistic assumption."

by MacNN Staff

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Gordio
Junior Member

Joined: Mar 2006

0

11/30, 04:48pm | report spam | close Reply |
I agree

I know at least two people who plan to switch once leopard comes out.

the first is my brother. I kept convincing him, but that's not why he'll convert. I'm actually not sure why, but yea his laptop fan is broken and he intends a mac to replace it once leopard comes out

A PC friend who taugt me how do build PCs from scratch when I was a PC fan a while ago decided he wants a mac. He couldn't cuz he didn't have a job. When he finally got a job i asked him why didn't he get one already. His reason was he's waiting for leopard.

And a possible third guy: my cousin. Since he doens't care about games or even do homework intensively, I'm gonna sell him my mini after i get an imac once leopard comes out.

Peter Bonte
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Joined: Aug 2001

0

11/30, 05:20pm | report spam | close Reply |
2

My brother went from Mac to PC for gaming but wants to buy a MacPro next year, there will be a big shift to the Mac. Going to 10% in the US next year is realistic and growth won't stop then, if the big switch is over i'm hoping for a real universal version of osX for PC and PS3 to kill off MS. Its war now and we need this to make the final kill.

horvatic
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Joined: Apr 2002

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11/30, 05:26pm | report spam | close Reply |
No PC version of OSX

There will never be a PC version of OSX. That would be suicide for Apple's hardware business. More than likely however more PC users will switch to Mac hardware and have the flexability to run OSX,Windows,linux all on the same box at full speed. Also you don't have to wait until next year for leopard as Bootcamp is available now to run Windows on a Mac. Also Parallels is also available virtual machine software which can run Windows within the OSX operating system. VMware is also coming online soon with there version for OSX.

Jonathan-Tanya
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Joined: Oct 2004

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11/30, 05:47pm | report spam | close Reply |
overclock

You used to be able to overclock a mac, without too much trouble, such as the blue & white G3, I could clock that from 300mhz to 450mhz just by changing a jumper block.

As long as you can buy a $169 E6300 from frys and clock it up to 3.0ghz...on readily available motherboards....

and Mac hardware doesn't allow the option or worse, requires resoldering the motherboard... as long as this is the case, forget it, Mac's are expensive.

For that matter, not being able to upgrade the graphics card in anything but the mac pro's is expensive.

I know, not everyone feels the same as me...but in the pc world, everyone gets to find their spot. In the Mac world, take apple's view or forget it...and thats one reason why they won't have as many switchers as they might.

JulesLt
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Joined: Jul 2005

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11/30, 06:17pm | report spam | close Reply |
Appliance

Jonathan - I've been round that loop (buy PC, extend life through graphics card, memory and CPU upgrades) but have stepped off for the world of Apple.

That's ALWAYS been the criticism of Apple from techheads.

What you have to realise is that it's also a selling point for a lot of consumers - look at sales of all-in-one hi-fi vs separates, or the increasing sale of laptops against desktops - upgradability is low on the majority of people's criteria - especially now that MS push the killer games over to XBox first.

eldarkus
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Joined: Feb 2004

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11/30, 07:30pm | report spam | close Reply |
very true

"upgradability is low on the majority of people's criteria"

That is a very accurate statement. Peopple want to buy a machine that they dont have to do anything to.

Ashari
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Joined: Nov 2003

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11/30, 08:54pm | report spam | close Reply |
Just get stuff done

Jonathan - I used to be on the PC upgrade cycle as well... dual booting between Windows and Linux. I bought a new $300 video card every 6 months, and added hard drives at an alarming rate.

But here's the rub -- after performing the surgery on the hardware, and recompiling the kernel (or downloading the driver for Windows), then launching the OS and tinkering some more with the desktop GUI, I realized one thing:

I just wanted my PC to act and look like Mac OSX.

So I bought a Mac and my PC hasn't been turned on for at least a year. I donated the 21" CRT to a friend.

Now I just get stuff done - no more tinkering, no more time sunk into recompiling and certainly no more digging screws out of the nether regions of the mobo-cave.

I've never been happier.

ClevelandAdv
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Joined: Jul 2004

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11/30, 09:10pm | report spam | close Reply |
$169 PC - who cares

Less than 1% of users will even attempt anything but the most minor modifications. Most PC Users will not even upgrade their OS, they will simply buy a new PC at some point. Overclocking is somthing that less than 0.1% of PC owners would ever attempt. If you want to look at what Apple's market share will be, looking at the ability to buy a PC for $169 and overclock it is not the way to do it. 10% market share is certainly within Apple's reach.

webraider
Forum Regular

Joined: Nov 2004

0

11/30, 09:47pm | report spam | close Reply |
There may never be...

A PC version but I do believe that Apple may licesne again to thrid party vendors... And obvious one being Sony. If Apple has a broad enough install base I can bet they'll try it again. Their relationship with Sony is a stronger one.

MacnnGregor
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Joined: Apr 2004

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12/01, 01:28am | report spam | close Reply |
I would bet

Apple could turn a tidy profit by selling licenses - I mean it just depends upon how much they charge, to compensate for a few fewer hardware sales. I could see that especially for the subnotebooks, if they decide to never enter that market. But it wouldn't be until they are well beyond 10% sustainably.

HighFolioLip
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Joined: Jul 2004

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12/01, 08:01am | report spam | close Reply |
Licenses

Macnngregor, Yes, Apple could turn a tidy profit selling licenses but do the math first. Apple consistently returns 25% or better margins. 25% of an iMac's selling price ($1500 sweet spot) is around US $375. You'd have to sell an awful lot of software to make that up, considering system software retails at $129, and less if you offer bulk licenses to box builders. Now, add even more sales to offset higher-priced machines. Apple was burned big on the hardware end before, and even though this time around Apple is on par with other hardware vendors licensing is still a huge gamble. Apple would be literally betting the company of they tried this again. I think Apple has enough new product ideas in the pipeline that they need not even consider licensing. The extra profit from increased sales to those who want to run Win on a Mac is just gravy, without risk. It's the perfect Trojan Horse.

Interlard
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Joined: Oct 2005

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12/01, 09:51am | report spam | close Reply |
Laughably out of touch

These investment researchers are so laughably out of touch. Macs already run Windows. Bootcamp going from current beta status to release status with Mac OS X Leopard will make a very minor difference.

Most people aren't going to install a different OS. It's just too scary. The only thing that will increase switching is Apple's advertising and recommendations from friends (how many of you bought a new Mac, only to see your friends switch, too?).

chaaalie
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Joined: Sep 2002

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12/01, 10:09am | report spam | close Reply |
Licensing vs. Hardware

The only way Apple licenses the OS to others is if their other businesses (iPod, iTV, iPhone etc) grow to the point that the return on the Mac hardware is a much smaller part of their total business. Right now the two major income producers are Macs and iPods ... if this pie were 5-6 pieces, each contributing about 15% to Apple's bottom line, then they might "risk" a hit to their Mac Hardware unit to bolster their software unit (which might not be too far-fetched when you consider most of Apple's acquisitions in the last couple of years have been software units.)

The reality is that if they do license the OS, they will likely lose the revenue off the lower-end machines, unless they price the OS in such a way to make it difficult for a Sony or Dell to compete with the iMac and Mini ... but that would make it much less attractive for other vendors.

The way the model would have to work is that Apple would have to have a Killer App, accessory or "Next Big Something" that EVERY Mac OS machine would want/need/use ... and then license the OS to get more customers out there. The iLife suite could grow into that, but anyone who licenses the OS would likely want that as well. Now if Apple were to buy SlingBox or TiVo and integrate those services into iLife ... making any MacOS machine into one or both of those set-top services (and possibly have a subscription fee) then the best business move is to get as many boxes out there as possible.

Terrin
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Joined: Jan 2006

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12/01, 10:27am | report spam | close Reply |
Does not Matter

First, there are four consumer PC playing fields. Build it yourself, low end, middle end, and high end. Apple does not compete in the low end, or build it yourself fields. For that matter, other big PC companies, do not compete in the build it yourself market. Accordingly, to just issue a general statement that Macs are more expensive is silly, especially when the matter of expense is relative to the user.

Moreover, talking strict hardware cost, there have been many articles recently saying how the MacBook Pros and the Mac Pros are actually less expensive then comparable offerings from Dell and company. With the MacBook Pro, the cost is significantly less.

With that said, for many there is value in features found only on Macs, including the OS, that push the cost of Apple's hardware up past its PC brethren in some areas (e.g. iLife, Mag-Safe power cord, light sensing keyboard, motion sensors to shut off hard drive in case of fall, and yes design). SInce for these users you are getting more, the Macs are not necessarily more expensive since in this world people usually have to pay more when they get more.

A couple of years ago, iBooks were significantly cheaper then comparable offerings from Dell.

I used to think Apple was making a mistake by not allowing people to upgrade their graphic cards. After selling computers for a while, including Macs, I understand most people do not understand the significance of this. For those that do, like myself, it really does not matter. The only hardware I have ever upgraded was RAM (even though I have mostly owned Power Macs). The ability to upgrade hardware is mostly psychological.

Finally, in the PC world there are more choices. For some people too many choices is a problem. When Apple had like a gazillion configurations, regular people struggled to make decisions. That is why when Jobs came back he narrowed the offerings. It worked, as sales increased substantially.

".....Mac's are expensive.

For that matter, not being able to upgrade the graphics card in anything but the mac pro's is expensive.

I know, not everyone feels the same as me...but in the pc world, everyone gets to find their spot. In the Mac world, take apple's view or forget it...and thats one reason why they won't have as many switchers as they might."

ecrelin
Junior Member

Joined: Oct 2000

0

12/01, 10:46am | report spam | close Reply |
no need to license�

horvatic was right that there will never be an official version of OS X for other machines but they will only benefit when people figure out how to do hack it on to other Intel boxes because they WILL be able to. I have always maintained that Apple should not be so biased against it and be happy to sell OS X to anyone at retail and simply not offer support for any platform other than a Mac. The few who would do it would have a less savory experience than simply buying a Mac but they also in fact become Apple customers at that point and the possibility of them buying more Apple products in the future is nearly guaranteed. A smart way to grow your customer base. I just did a product comparison for my sister who needs a new laptop and was amazed at the fact that Apple's line is consistently cheaper than competition in every model line I looked at. She will be a first time Mac buyer and I think this is an indication of a trend that is gaining traction big time.

tsmelker
Fresh-Faced Recruit

Joined: Feb 2006

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12/01, 01:07pm | report spam | close Reply |
No comparison

I wish people would stop comparing Apple to companies like Dell, HP, etc. It's like comparing Chevy to Aston Martin- there simply is no comparison. Dell, HP and the like are simply vendors- they cobble together a hardware shell, the slap a copy of Winblows inside to make it "work". There is no innovation or imagination involved, and that goes for Sony as well. Apple is an innovator- and they are the only technology (NOT computer) company that manufactures their computers AND their OS. They are also the only technology company that incorporates style and function in all their products, and they lead the way in everything they do. Remember when PC companies were falling all over themselves trying to incorporate colored plastic on their products to cash in on the popularity of the iMac? I rest my case.

Media watchers are always harping on "Market share", and who has how much of it. Apple is slowly making inroads by making fantastic products- and making them work well. Mercedes doesn't have a large market share, but you don't hear people saying, "Mercedes would have more market share if it would just be more like Ford; if they don't, they're likely to go out of business."

Apple has already had one debacle with licensing their OS. It was bad for the company's image as a maker of stable, stylish products- which is why it was the first thing Steve Jobs put a halt to when he came back to Apple. Why would I want to put my s***, stylish Mac OS into a crappy Dell or HP? Even Sony lags behind the style and function of the Mac products- they should just stick to the Walkman and their cameras, anyway. What is a Sony computer than just another hardware shell like Dell's or HP's? Gimme a break, people!

eddd
Fresh-Faced Recruit

Joined: Dec 2001

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12/01, 03:05pm | report spam | close Reply |
the more things change...

It makes more sense than ever before for Apple to license the Mac OS, and a reasonable case can be made for it. But I still don't think it will happen... Apple has never had a smooth relationship with ANY other company, be it Motorola, IBM, HP or any of the old cloners. And even though Apple machines are now a good value (desktops especially), they would lose a lot of hardware sales to home builders and Walmart shoppers who wanted to put OS X on a POS Acer machine or something.

Apple doesn't have a mid-level line aside from the iMac, which really isn't comparable... it stresses simplicity, not value. They would have to start competing at numerous price points, and would watch as most of their sales went to low-margin machines.

They're in a great position right now, and I don't see them changing anytime soon... I would even venture to say that they are the envy of just about every other comp tech company at the moment.

ibugv4
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Joined: Jun 2003

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12/01, 04:21pm | report spam | close Reply |
Corrections

Until Intel, iPods were the majority of Apple's revenue. It wasn't until "Hey! We run Windows!" that the Mac Hardware was really making the "big dent" in their bottom line.

Licensing is the future. They have to license something, and I see that being their OS. If they license is over iPod, they can't be slapped with a monopoly lawsuit in the future.

Apple will not license to Sony. They've had a bitter rivalry going on since the "year of HD" when the Sony CEO was more or less told to "stick to making camcorders, we'll do the rest." They would license to Dell, who uses the same chips and processors as Apple. For those of you who haven't noticed, Apple made the case... everything else is Intel. Apple's not "in the hardware business," they are in the DESIGN business. That free software is soon going to cost you a fortune.

Regarding upgrades, I'm now going to overclock my G3 B&W cause I didn't know I could -- I've overclocked all my Beige boxes over the years. I've been reading reports of people throwing Woodcrest processors into the mac pro towers, and they're getting some insane bench results. Who says that Macs aren't upgradeable or hackable or overclockable? If you do you're simply retarded and blind to fact, try using Google for terms like "mac pro hacking."

Regarding what consumers want, Apple's proven that they never want to open the case. Thats why the best selling hardware (ie NOT the Mac Pro) are systems that literally snap together. Only Apple could pull that off and call it chic, everyone else would be called cheap. Apple's systems are designed to be obsoleted at a certain point. My friend STILL has a beige G3 with OS X 10.2 that does his surfing needs just fine. yes, there are people who DO NOT require glitzy graphics, flash or even JAVA to use the web.

Don't let your own bias of what you want in a system cloud your vision. Apple will license, they'll do it to spite Microsoft but only after another vendor for an office product emerges, and I don't think it will be Apple who makes that. I think someone open source will. Or Microsoft will be reduced to "that productivity software company."

Apple will become a brand name larger than Sony can dream, with Sony being in the red, having massive lawsuits, and that little battery recall going on ... its simply a matter of time before Apple steps into the HD TV market (why fight for BluRay or HD, when you can let the others fight it out then pick the winner and make a killer product on that technology -- let the other companies play R&D for you, remember how iPod got it's boom... same way), the mobile phone market, and who knows where they'll go from there. They sell services not just devices. They make more off a .Mac subscription than if the person habitually bought a new low-end Mac every year. iTunes Music Store has turned a profit, it's been turning one for a while -- unheard of in the post-dot-com-bust era we live in. A

chadpengar
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Joined: Oct 2001

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12/02, 01:10am | report spam | close Reply |
re: corrections

Uhh, "Until Intel, iPods were the majority of Apple's revenue. It wasn't until "Hey! We run Windows!" that the Mac Hardware was really making the "big dent" in their bottom line." is not true. Go dig up some old reports. Only now is the iPod reaching Mac levels of revenue. Q3 of 2005 and 2006 had CPU more revenue than iPod (does not include Mac SW and iTunes store sales) but Q2 2006 had slightly more iPod revenue than CPU. Remember the Apple fiscal year is not a calendar year and intel was nonexistent in 2005.

chadpengar
Fresh-Faced Recruit

Joined: Oct 2001

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12/02, 01:13am | report spam | close Reply |
Apple will license

Apple will license OS X. But it will not be open ended licenses. It will be in an area that Apple does not compete. Something (hypothetically) along the lines of say, HP and a corporate desktop PC. HP (or Lenovo or someone with a strong corporate presence) will not get an open ended license that allows them to put it on any of their machines, but rather some limited license for certain market targetted machines, probably sold through their existing corporate non-retail channels. Apple will use this to expand OS X in to areas where they do not want to expend the effort themselves.

Watch for it.

Fast iBook
Fresh-Faced Recruit

Joined: Mar 2003

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12/04, 12:12pm | report spam | close Reply |
I doubt..

I doubt Apple will license its OS anytime soon. If they did they would undercut their own CPU sales, something they currently can't afford. Maybe in the future when the marketshare of these 3rd party hardware folks wouldn't threaten Apple's core cpu marketshare. Also, some folks still don't get that Apple is not bob's discount peecee box emporium. They make premium hardware, and premium software. They do not have the marketshare yet to be able to release something less expensive than the mini, because they have to stay competitive, on the edge. Pooping out low end machines that lack true Apple fit and finish would be a horrible mistake. If they can afford to release a quality low end machine with brilliant design and great fit/finish, i believe we will see one when that is the case. For now we're still in a time of transition, especially waiting for Leopard. They know what they are doing! Give it time, and Apple will blow our minds as they always do.

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Apple 'switch' rates underestimated?

updated 04:15 pm EST, Thu November 30, 2006

Apple 'switch' rates

I agree

2

No PC version of OSX

overclock

Appliance

very true

Just get stuff done

$169 PC - who cares

There may never be...

I would bet

Licenses

Laughably out of touch

Licensing vs. Hardware

Does not Matter

no need to license�

No comparison

the more things change...

Corrections

re: corrections

Apple will license

I doubt..

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Apple 'switch' rates underestimated?

updated 04:15 pm EST, Thu November 30, 2006

Apple 'switch' rates

Related Articles

Recent Articles

I agree

2

No PC version of OSX

overclock

Appliance

very true

Just get stuff done

$169 PC - who cares

There may never be...

I would bet

Licenses

Laughably out of touch

Licensing vs. Hardware

Does not Matter

no need to license�

No comparison

the more things change...

Corrections

re: corrections

Apple will license

I doubt..

Login Here

Register for our weekly email newsletter:

Connect tools:

Subscribe

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on Twitter

10 Most Read

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