Halo Effect Commentary

RedHerring is running a story based on a article by Roger Kay of Endpoint Technologies Associates. The article suggests that the "halo effect" may not be valid because "we are now in an upgrade cycle in which the Apple faithful buy new systems." Putting aside the arguably derogatory nature of the "faithful" adjective, I just don't think the numbers support this.

The centerpiece of Kay's argument is that market share has grown from 1.8% in Q3 of 2004 to 2.5% in Q2 of 2005, essentially suggesting that this is not enough.

Let's back out of percentages for a moment and look at raw numbers. In the fourth quarter of 2004, Apple sold 836,000 Macs. In the fourth quarter of 2005, Apple sold 1,236,000 Macs, or 48% growth. I think that's too big to be a simple upgrade cycle.

In addition, Apple Stores actually collect sample data on purchases by first-time Mac owners. In fact, the New York Post has an article which states 1 million people who bought Macs in the first three quarters of 2005 have never bought one before.

So why the divide?

I think it's because there's a temptation to equate "global computer marketshare" with the number of consumers that select a given brand in-store or the quantity of desktops and laptops that businesses order for their employees. In reality, global marketshare means all computers.

If a computer is bought to function as a simplistic point-of-sale device, that's factored in global market share even though Apple isn't in this market. Nobody is going to buy and install Final Cut on such a machine. They're both computers, but they're as different as a golf cart and a Mustang.

The only question that should matter to users, developers, and analysts is how Apple's products are being received in the markets that they're actually created for.

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