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Apple’s Halo Effect Is Alive And Well When It Comes To Mac Sales

Apple’s Halo Effect Is Alive And Well When It Comes To Mac Sales

April 1, 2014
Mac shipments have outpaced the overall PC market in 30 of the last 31 quarters. This suggests the Mac “seems to defy the law of economics,” according to Charlie Wolf of Needham. Unfortunately, the same can’t be said for the iPhone, which has seen its market share drop in recent years, according to AppleInsider. In a note to investors, Wolf says that Mac sales have continued to grow despite a drop in the overall PC market. He believes the Mac’s relatively small share of the market has given it opportunity to grow. He says:
Against a background of progressively rising prices compared to the prices of PCs, the Mac has consistently gained share in the personal computer industry as a result of an outward shift in its demand curve. The only explanation that we see for the shifting demand curve is the now-mythical halo effect.
As AppleInsider notes, this halo effect “refers to the belief that sales of devices like the iPod, and later the iPhone, have helped to tie customers into the company's ecosystem of devices. That, in turn, has helped to boost Mac sales.” Despite this, the iPhone’s share of the overall smartphone market has plummeted in recent years. After hitting a peak of 23.8 percent in the fourth quarter of 2011, the iPhone now holds just 17.8 percent of the smartphone market. Wolf says the iPhone has seen the biggest decline in places where low-cost smartphones are driving industry growth. It has lost “meaningful share” in emerging markets such as Asia-Pacific, the Middle East, and Africa. Regardless, Wolf isn’t concerned by this trend. “Imploding smartphone prices,” not changes in consumer behavior, are the reason for the shift. I believe what Wolf is telling investors is that Apple shouldn’t be losing sleep over declining iPhone market share. After all, the gains being made elsewhere are for low-cost devices with small profit margins. This almost certainly means Apple will continue to produce a mix of high-cost and mid-cost phones, even if it means a further drop in iPhone market share. The next iPhone is likely to arrive later this year. See also: The Latest Apple 'iPhone 6' Concept Features A Curved DesignProduction Of Apple's 4.7-Inch iPhone To Begin Next Month, and Three Images Leak Purportedly Showing Apple's 'iPhone 6.'

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