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Piper Jaffray: The iPod Halo Effect is Real and Growing

Piper Jaffray: The iPod Halo Effect is Real and Growing

by , 11:15 AM EST, November 24th, 2004

Much has been said of the iPod's "halo effect" -- the notion that strong sales of iPods will spill over into sales of Macs. Analysts have routinely cited the factor in bolstering their outlook of Apple, but to date little proof exists that the halo effect is in any sort of effect (most recently, Apple's global market share for sales of new systems fell to a paltry 1.8 percent).

While sales of Macs have been holding generally steady quarter after quarter, hovering around 800,000 units, a survey conducted by Piper Jaffray, the brokerage firm that earlier this week raised its target on Apple to $100, found that 6 percent of iPod users have in fact switched from Windows to Mac, and that another 7 percent are planning to make the switch.

C|NET notes that Gene Munster, a senior research analyst at Piper Jaffray, believes that the iPod halo effect is only beginning. "We're in the very early innings of a multiyear trend," he said.

The Mac Observer Spin:

A lot of controversy surrounds the halo effect and whether it really exists. Steady (and not growing) sales of Macs over the last couple years suggests that if there has been a halo effect, that without it sales of Macs would have actually declined. If we assume that half of iPods are sold to Windows users (the real number is likely more), then 3 million iPods have ended up in the hands of Windows users, which using Piper's 6 percent figure translates into 180,000 switchers. Unknown from Piper's survey is whether the 6 percent of iPod owners who had switched made the switch before or after getting an iPod, as the former would discount the halo effect. We'll have to see how holiday sales of Macs fare this year, which will perhaps be the most telling sign yet of a halo effect--especially since Apple recently refreshed its consumer iMac and iBook products, making them more appealing than ever.

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