iPod: The Only Reason to Buy a Mac?

by Chris Seibold Nov 03, 2005

The iPod, few would disagree, is a major hit. Knowledgeable individuals are opining that this year the total number of iPods sold will near forty million. Competitors may be befuddled but to the digital audio buying public there only exist iPods and pieces of worthless junk. Fans and stockholders of Apple computer are understandably elated. At least most of them are, selling a ton of iPods isn’t enough for the people who fervently desire the Mac platform to shine.

These people want to see Macs move and believe that massive iPod sales will surely result in increased Mac sales. The notion that people who buy iPods will then by Macs has become known as the “Halo Effect’ and seemingly a day doesn’t pass where you don’t hear the magical “Halo Effect” mentioned. Which sets up an interesting scenario: The Mac is suddenly dependent on the iPod for its success or failure. No matter how “insanely great” OS X is the fortunes of the operating system are firmly tied, in the minds of some, to the success of the iPod.

Thinking about recent Mac sales there is every reason to believe that the iPod is exerting a powerful effect on the numbers of Macs sold. The notion isn’t surprising, when results are reported the Mac sales are always cast in the most positive possible light. Imagine that Mac sales were horrible for the first quarter of 2005. When the execs announce sales for the second quarter they note that sales were up 30% over the previous quarter without noting that the previous quarter featured a 35% drop in demand. Which is no big deal and no reason to criticize the Apple PR spinners, their job is to put Apple in the best light possible. They are also required to give out some hard data so at this point an examination of the data is in order.

Ah, what better method to illustrate quarter after quarter of results than our friend the graph? Probably many things but since a graph is handy let us take a look:

iPod sales

Mac Sales

It certainly seems like we are seeing some sort of halo effect, the bulges and dips seem to march together (one would expect the spikes in the Macs sold to actually lag behind the spikes in the iPods sold category but… whatever). Concrete proof of the iPod halo effect, yes? Let us not gallop too far ahead of ourselves at this point. While Macs are seemingly on the rise the longer view looks like this:



What we see here is a different story. Suddenly it isn’t so much that the success of the iMac is pushing up Mac sales rather that Mac sales are finally recovering from the change to OS X.

The notion that Mac sales are just now recovering from the switch from Classic to OS X may seem quaint to the tech minded among us, after all tech folks were using OS X as soon as possible, but it is likely the case. Broad acceptance comes much more slowly than acceptance by the technically elite. To cite one particularly salient example the local newspaper is a Mac shop and they are thinking they might make they change this summer. It may be worthwhile to remember that Macs didn’t boot to OS X exclusively until 2003. Presumably there are still OS 9 machines with a few months of AppleCare coverage left.

With this information in mind, we are left with two alternatives. We can choose to believe that the recent growth of the Mac is due to the unintentional beneficence of the iPod or we can surmise that the Mac is finally returning to Pre iPod levels of demand. Neither is a very palatable option. In the first case one shudders to think where Mac sales would be without the iPod and in the second case Mac fans aren’t seeing any actual growth they are only witnessing the completion of the switch to OS X. In actuality it a probably a little of both, the iPod has undoubtedly lured more than one person to the Mac and the switch to X, despite Steve’s seemingly earnest exhortations, took a bit longer than most people realized.

 

Comments

  • The more salient graph would be by penetration of the Mac platform, rather than Quarter-by-Quarter sales.  Sales _levels_ are just now back to recovery, but your point about old Mac shops clinging to their OS 9 machines indicates that much of the sales volume in the last few years has gone to “switchers”—which grows the overall base, and that base is the fundamental driver of sales projections looking forward.  If I switched for the first time, say, 3 or 4 years ago I am probably now about ready to buy my second (or third) Mac, and when the Intel machines start coming out I suspect you’ll see a lot of folks buying their second Mac.  Those buying their second Mac seem like the real “canary in the coalmine” for the platform, because they represent switchers who are staying with the platform.  Bottom line: it might not be as bleak as you suggest.

    Nathan D had this to say on Nov 03, 2005 Posts: 2
  • Graphs offer little in proving that the Mac’s fortune follows iPod sales.

    The reality is the arguement dies when confronted with the fact the a majority of iPod sales go to Wintel using consumers. Is there a Halo effect? Yes but it’s pretty small IMO. Macs are supporting themselves just fine iPod or not.

    hmurchison had this to say on Nov 03, 2005 Posts: 145
  • According to the iPod graph, the sale of iPods has really increased in Q4 of 2004. Following up with hmurchison’s statement that the majority of sales go to wintel users, it could be that the combination of the ITMS & wintel compatible iPods is the determining factor for the increase in iPod sales. Let’s face it, there isn’t an mp3 player & music store that work so well together & is easy to use as the ITMS & iPod combination. Whether this translates into more people switching from wintel to mac remains to be seen. I was quite content as a wintel user until my wife purchased her PB 2 years ago & I have been won over by the ease of use & surfing with impunity. I still have my xp box at home & at work, but I sure do like the mac & I will tell anyone who will listen why they should switch! However, no matter how much malware a average wintel user picks up, they will just keep running spyware detectors & virus scanners because their IT specialist cousin or neighbour or friend uses wintel & more often then not, this IT specialist is the one they will go to for purchase advise and support. Plus people tend to stick to what they know & most people just don’t know they have an option.

    dleboubon had this to say on Nov 03, 2005 Posts: 17
  • Honestly, I don’t see much of a correlation in those graphs.  I see growth in both iPod sales and Mac sales, but one would expect to see that for any successful computer company, especially one that’s been in the news as much as Apple.

    I guess you can find meaning in everything, but I find the little spikes much more interesting, and wouldn’t be surprised at all if they coincide with Steve Jobs keynotes for new product launches.  That seems to me to be the most relavent pattern.  Jobs announces a new product; sales spike; Mac users problaim that “this is the one that will finally get Windows users to switch”; sales taper or fall; repeat.

    Beeblebrox had this to say on Nov 03, 2005 Posts: 2220
  • I appreciate all the comments but to Beebs point:
    The correlation is tricky to see mostly because of the scale. The iPod has sold a lot more units than the Mac. There are statistical methods to look for a correlation and, when applied, you see a fairly consistent correlation. A discussion of those methods is probably beyond the scope of the article (which I tried to keep short with short paragraphs).
    More tellingly there is no lag between the iPod sales and increased Mac sales which would be expected. But what really seems to be happening (which you noticed) is that the sales tend to go up when new lines are introduced and that happens at about the same time for the iPod and Mac. An exception: the spike in Mac sales at about the fourth quarter of 2004. A seeming anomoly until you realize, hey man, the iMac g5 just came out!

    Chris Seibold had this to say on Nov 03, 2005 Posts: 354
  • But what really seems to be happening (which you noticed) is that the sales tend to go up when new lines are introduced and that happens at about the same time for the iPod and Mac.

    I agree.  I think the halo effect is largely an illusion caused by concurrent iPod and Mac announcements that result in simultaneous sales spikes in both product lines, leading true believers to see a causality that probably isn’t really there.

    Beeblebrox had this to say on Nov 03, 2005 Posts: 2220
  • Btw, in answer to the question, I don’t think the iPod is the only reason to buy a Mac, although I suspect you’re wondering if the rest of the home computer market perceives it that way.

    It’s hard for me to say since a disproportionate number of people I know use Macs, so there’s not really the association with Apple and JUST the iPod.

    But outside of the entertainment industry, I would most likely recommend a Mac to someone who was mainly interested in a computer to handle digital media, like digital still cameras, video cameras, as well as music and the iPod.  It’s here, particularly with photos and music, that I think my Mac experience most clearly exceeds the experience on the my PC.

    Beeblebrox had this to say on Nov 03, 2005 Posts: 2220
  • I don’t think there’s that many switchers either.  I’ve tried a few times to talk a few mainstream (non tech) people to a mac and they want to but they just go back to what they’re used to.  The main reason I got was that with Windows, they have other people they can ask for help from.

    It’s the new adopters that initially try the product and they convince others to buy which works it’s way to the mainstream.  The iPod still isn’t in the mainstream.  It’s getting closer every christmas season but it still hasn’t hit it yet.  The vast majority of people I know don’t have one.  It’s not like a toaster, TV, or DVD player (which my grandma just bought…mainstream product)

    So with the iPod, early adopters convinced the mainstream and the mainstream is buying in.  This process takes years and years for tech products.  The iPod is still way too young for the mainstream but sales will multiply like mad after this season as the mainstream convince other mainstream.  That’s where sales get crazy.

    So, with the mac, early adopters have been trying to convince mainstream for years and years and they still aren’t really buying in.  People go into the Apple store, look at the pretty computers, ew and ah then move to the back where the iPods are (note that the iPods accessories are at the back of the store where the customers have to pass the computers). 

    This brings us to the most convincing argument.  Steve Jobs is fu@king smart as .(JavaScript must be enabled to view this email address).  He’s not advertising the mac because he knows this.  He would be wasting money advertising. He’s waiting and saving up all that stockpile of cash until his computer can run all windows products on the Mac so there’s no incompatibility problems.  Note the move to the two button mouse, iPods to USB only and that command button is getting moved soon to the control button, and obviously Intel.

    Also note that SJ dropped the switcher campaign because he found out that it’s a waste of money to invest in that strategy because that’s not what is fueling the increase in Mac sales.

    The increase in Mac sales is due to OSX getting to be one slick OS.  It has all the tools you need, Mail, Safari, iPhoto, etc.  The increase in Mac sales is just that he’s switching early adopters back that went to Windows 5 years ago, myself included.  OS 9 was pretty rough cause there just weren’t any programs for it.

    Further examples of Steve’s brain is the earbuds are still white.  Those things are walking advertisements about the iPod.  He’ll shoot himself before he changes the color of those.  People link those white wires to those happy silloutes in the commercials… where ALL you see are WHITE EARBUDS.

    There’s only one thing Steve wants in this world and that’s to make Gates sh!t his pants over his financial statement.  1) You can never underestimate SJ, he thinks of everything.  for example, that people want black headphones.  With #1 true, you can deduce that not many people in the mainstream are switching or Apple would be broadcasting to those people like mad.

    Pete K had this to say on Nov 03, 2005 Posts: 4
  • Just one more thing I forgot about is that those new computers he’s coming out with are just so amazingly cool looking.  That’s what’s fueling the growth.  This is fueling more early adapters to purchase.  I’ll bet those drops in sales are when the products need to be refreshed.  The style of those are fueling the apitite of early adapters.

    Pete K had this to say on Nov 03, 2005 Posts: 4
  • I’ll bet those drops in sales are when the products need to be refreshed.

    The drops happen too fast for that to be the cause.  What seems to happen is that existing Mac users, the predominant market for Mac sales, buy newly announced products as soon as they hit the shelves, causing the spike.  Those sales quickly taper off as the diehards get their products and wait around for the next announcement.  Percentage wise, very few of those sales are from switches, otherwise the spike would be more of a steady growth and wouldn’t fall off as much.

    If you want to see what real switcher/adder growth looks like, then just look at the graph for iPod sales.  It doesn’t spike at all, it just keeps going up.

    Beeblebrox had this to say on Nov 03, 2005 Posts: 2220
  • Okay, I’ll bite on the fact that not many early adopters (pc users) are picking up a mac.  But I don’t understand how the graph depicts the markets slow adoption of OSX.  Wouldn’t a company that was using OS9 just buy the next mac on the same purchase schedule as before but instead of using OSX, they load OS9?  Why would they hold out purchasing a new computer just because a new operating system was introduced?  They could still keep their old operating system.

    Pete K had this to say on Nov 03, 2005 Posts: 4
  • Wouldn’t a company that was using OS9 just buy the next mac on the same purchase schedule as before but instead of using OSX, they load OS9?

    Not necessarily.  Companies that use very specific hardware/software don’t like to change unless absolutely necessary.  They have a strong “if it ain’t broke, don’t fix it” philosophy.

    Now, obviously at some point they have to shift to new systems, usually at about the time you’re starting to see the slow rise now in OS X, about 5 to 10 years.

    Unfortunately, Apple is about to make yet another MAJOR transition by switching over to Intel.  I’d imagine you’ll see existing Mac owners sticking with their computers longer than usual as a switch to an Intel Mac means getting all new software and/or a rough transition period that is simply not an option when you have a business to run.

    Beeblebrox had this to say on Nov 03, 2005 Posts: 2220
  • You’ve made me realize an excellent point on that graph, Pete K. I don’t think anyone’s taken into account that the Mac sales have gone -back?- up with almost zero advertising of the computers. When Mac sales were on the high peak before, I remember those TV ads for iMac’s. But those have stopped now, so there’s gotta be something fueling the sales going back to that level.

    So it may not necessarily be iPods directly creating a halo effect, but they’re definitely doing a shitload for advertising on the computers! Which completely explains why Steve’s been plugging all the new computer stuff first in his - almost superbowl-like audience growing - Keynotes.

    Also, Chris - you’ve speculated on some important things: WAS it the transition of OS9 to OSX ?

    But I’d appreciate if you could at least proof-read your stuff before publishing it (= It gets quite difficult to read with certain words or punctuation missing.

    Luke Mildenhall-Ward had this to say on Nov 04, 2005 Posts: 299
  • Luke Mildenhall-Ward (what? are you like a count or something? that is a pretty great name),
    Thing is I do proofread everything. I print it out and correct everthing with a prismacolor marker. Thing is it doesn’t seem to help anymore. I’ve spent more time proofing my articles lately than writing the things all to no avail. I know why it isn’t helping but that is a state secret…meaning you’ll have to email me to find out why.

    Chris Seibold had this to say on Nov 04, 2005 Posts: 354
  • With knowledge of current Marketing concepts you can deduce many behind the scenes company information.  The fact that Apple is greatly driven by marketing strategy’s, there are certain things you can deduce. 

    Steve’s mind makes almost every decision based on the principle of return in investment, ROI.  You can apply this to his marketing decisions.  If Apple spends $1 of advertising the iPod, how much will he get back compared to how much he will get back if he apply’s that dollar to the computer market.  Right now, I’m deducing that he will get more back from that $1 if he advertises the iPod in comparison to the $1 spent on the computer.

    Now consider If he spends that dollar now on the computer market compared to if he spends that dollar when the Mac’s can run Windows programs.  That dollar will get back much more ROI (cash) when his sales staff can say that it runs 99% of programs out there.  The customers can slowly transition from Windows (dual booted) to Mac on the same computer.

    Pete K had this to say on Nov 04, 2005 Posts: 4
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