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Analysts: Apple Could Benefit from PC Upswing

By Blane Warrene MacNewsWorld ECT News Network
May 26, 2004 2:24 PM PT

A new report released by research firm Gartner predicts that around 260 million personal computers will ship in 2004 and 2005. According to Gartner, the volume of units shipped will outnumber those replaced in 1998 and 1999, many of which were purchased in response to Y2K concerns.

Analysts: Apple Could Benefit from PC Upswing

"Our first quarter results suggest the Y2K replacement cycle that vendors have been anticipating for more than a year is under way," George Shiffler, principal analyst of client platforms research at Gartner and the author of the report, said in an interview with MacNewsWorld.

Shiffler said these numbers represent US$213 billion in 2004 and $226 billion in 2005, and any small shift in PC-vendor market share could translate into substantial revenues for Apple.

Opportunity for Apple?

"Expiring OS support will play a significant role in driving PC replacements going forward," Shiffler continued. He believes this wave of sales is one about "defending the installed base" for most PC vendors. For Apple, however, he thinks this is an opportunity to acquire new customers.

"Apple has a relatively small market share in the global view of PC units shipped," Shiffler said. "Their gains would come from [converting] competitors' sales to their platform."

When contacted by MacNewsWorld about the Gartner study, Apple representatives declined comment.

For his part, Jupiter Research senior analyst Joe Wilcox said that data from his firm's research demonstrates that PC buyers either have purchased a system in the last three months or more than two years ago.

"There is an upgrade cycle underway," Wilcox told MacNewsWorld. "The last big surge was in 2000, when Internet service providers were offering substantial rebates or even free computers when signing up for three-year terms for their Internet service."

Apple and the Consumer

Those ISP contracts are expiring and Wilcox believes these same buyers, who have already previously invested in non-PC home entertainment such as large screen televisions, are now in the market for computers.

"This can have an impact on Apple," Wilcox said. "There is increasing interest in home networking and multiple-PC households."

Shiffler agreed that Apple could see gains in the consumer marketplace, especially in conjunction with the consumer digital revolution in progress.

In addition, Wilcox believes Apple's iLife creativity suite provides a powerful alternative to Windows-based applications for working with photos, music and multimedia.

Displacement Technology

According to Wilcox, past products that displaced once-established consumer technology, such as CDs and DVDs replacing vinyl records and VHS tapes, provided a powerful enough experience for the public not only to repurchase content they already own but also to adopt hardware to support the technologies.

"ILife offers a personal experience that could increase Mac adoption," Wilcox said, adding that Apple's marketing of its "iApps" strikes a chord with buyers and offers a more intuitive and easy-to-use interface than its competitors.

The Overall Market

"It should be an interesting autumn" for PC sales, Wilcox continued. "Microsoft will be trying to reinvigorate interest in Windows XP, releasing new versions of Tablet PC and Windows Media Center."

For his part, Shiffler pointed out that the enterprise marketplace is watching for the release of Windows XP Pro Service Pack 2, which purports to offer increased security features for the operating system.

"This will be an element of the increased sales," Shiffler said.

As previously reported on MacNewsWorld, Apple's enterprise focus was enhanced by the release of Microsoft Office 2004 this month, which has focused in part on interoperability.

Wilcox said that Apple potentially could see sales gains in the enterprise market as well.

"IT managers consistently report interoperability as a priority," Wilcox said.

Wilcox concluded that Apple's challenge is to keep the Mac platform front and center during this buying cycle.

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