Apple's Growing Bite of the Market

Put Windows on a Mac, toss in many with Intel chips, mix with the public's passion for the iPodand you've got big market-share gains for Apple

Windows PC users cite plenty of reasons for not wanting to own a Mac. One of the biggest has historically been the inability to run Windows applications—many of them needed for business—on an Apple computer. But that and other reasons are becoming less valid, and evidence is mounting that a potentially tectonic shift in Apple's place in the PC market could be coming in the next few years.

In case you hadn't heard, Apple's (AAPL) Macs can now run Microsoft's (MSFT) Windows. Also, by the end of the year—with luck, by the end of the summer—all Macs will be built with microprocessors from Intel (INTC). That, combined with the runaway success of the iPod music player, augurs a considerably brighter picture for Mac sales and worldwide market share starting about 2008.


 Charles Wolf of Needham and Co. says Apple could end up with a global PC market share north of 5% by 2011, compared with a 1.9% sliver in 2005. How does he reach that conclusion? He asked Windows users. Wolf had Harris Interactive poll about 2,400 people on their intentions to buy a Mac. About 300 didn't own a computer and another 100 or so already owned a Mac, leaving 2,092 people who use Windows on home computers.

Those people were asked to attach a percentage to their likelihood of buying a Mac. Mind you, gauging people's intentions is tricky. Of those who say they're 40% likely to do something, generally speaking only 1% actually ever end up doing it, Harris says. So if 1,800 people give answers in this range, only 18 will actually do it. But once people start saying they're 50% likely to do something, they're a lot more serious about doing it, according to the pollster. Wolf's survey was adjusted—way down—to allow for this statistical tendency.

But even after that, the results yield some pretty interesting findings: Assuming that the Mac cannot run Windows applications, 4.3% indicated an interest in switching from a Windows PC to the Mac. That translates to about 90 people out of the 2,092 in the sample. When asked if they would switch to the Mac if it could run Windows, the percentage saying yes doubled to about 8%.


 Some of the people in the survey group owned an iPod. And here the results are stunning. In this category, 7.6% say they'd switch even if the Mac can't run Windows. With Windows, that percentage swells to above 20%. One starts to see some statistical evidence that iPod is giving Mac the "halo effect" you've no doubt heard about.

That users are so much more likely to switch when they know Mac can run Windows gives Apple a plateful of marketing food for thought. For years, the biggest complaint among people who use Windows and are interested in switching to the Mac has been the lack of certain applications they consider available only for Windows. Boot Camp, the software that lets Mac users toggle over to Windows, is in beta testing now, and expected to become a standard feature in the next Mac operating system—Mac OS X version 10.5, aka Leopard—due in early 2007. It gives Apple a high card in the "switch to Mac" game.

Wolf stresses that he "bent over backwards" to interpret the survey results conservatively. Even then, they suggest 772,000 Macs, about 17% of the 4.3 million units expected to be sold this year, will be purchased by people switching away from Windows, Wolf says. He bases that projection on forecasts for future PC sales growth from market research firm Interactive Data (IDC).


  But in the following two years the phenomenon gathers steam. His figures for 2007—the year the Intel transition is complete and Windows-ready Leopard launches—show 1.7 million Windows users switching to the Mac out of 6.7 million Macs sold, implying a 25% rate. The year after that shows nearly 3 million switchers, or about 29% of a total 10.2 million Macs sold.

By 2008, assuming IDC forecasts for worldwide PC sales of 279 million units are correct, the Mac could account for 3.7% of the worldwide market. The company's share starts to approach 5% by 2010. That's more progress than Mac users have seen in many years.

Meanwhile, some 80 million people are going to visit an Apple store this year, and half of them will be Windows users. I've heard that the new Fifth Avenue store in Manhattan is seeing 12,000 people a day, and it's not hard to believe. I was there the other night—at 9:45 p.m. on a Monday night—and counted more than 200 people in the place.

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