Are Microsoft’s Delays a Boon For Apple?

A recent contentious commercial for the first Intel-powered Macintosh begins with a narrator
saying: “The Intel chip. For years it’s been trapped inside PCs, inside dull
little boxes, dutifully performing dull little tasks …”

Maybe if the wise guys at Apple knew of Microsoft’s looming troubles they
would have added “… dull little boxes waiting for Vista software that once
again has been delayed.”

Certainly many of those “dull” little box makers were disappointed to hear Windows Vista, and now Office 2007,
would not be available to consumers and small businesses this holiday season after all.

It’s not clear what effect the delay will have on PC sales during the
usually big-selling holiday season, but it’s not a welcome development.

“There’s no question this could hurt hardware sales in the fourth
quarter,” Tim Bajarin, analyst with Creative Strategies, told “But I’m sure the hardware vendors are beating up
on [Microsoft] to try and salvage this.

“Microsoft is going to have to
provide $10 to $20 coupons, or something similar, in new PCs this fall for
an upgrade to Vista.”

But might some of those would-be holiday PC buyers consider an
alternative, like a new Intel-based Macintosh? Analysts don’t expect the
Vista delay to have a huge effect on Mac sales unless Apple brings out a hot
new system with extra-compelling features and/or especially aggressive price

But even then, most retail stores don’t carry Macintosh, so for
shoppers at major chains like BestBuy, Circuit City and office supply
chains, the PC is it.

Apple sells Macs online, at its own chain of Apple
stores, CompUSA, and MicroCenters among other locations. Apple had no
comment for this story.

“There’s a potential upside for Apple from the Vista delay,” said Matt
Sargent, analyst with Current Analysis. “If they came through with a Mac
Mini with a TV tuner and TiVo-like functionality, that would be very
interesting and you could see Apple have a big holiday season.

“I think Apple has a better fix on what a media center or digital
living-type computer should be, which is almost more like an assistant to
what you already have. Microsoft and Intel see it more as the ultimate
center of the household, and I think people struggle with that concept. The
Mac Mini is more like a separate device that doesn’t take over; it’s more
like Microsoft’s XBox 360.”

Apple currently has between a 6 percent and 7 percent share of the retail
PC market in the U.S., according to Stephen Baker, analyst with NPD

Baker thinks Apple is on track to have a good holiday season but
thinks the impact of Vista’s delay will be negligible.

“People will buy Macs
for lots of different reasons, but it’s a tough proof point to say they’re
going to gain five points of market share because Vista is two months late.”

Baker says Apple’s bigger challenge is how to replicate the wild success
it had last fall when it sold 14 million iPods, more than a 200 percent jump
over the same quarter in 2004.

“You think of Apple as a computer company,
but iPod is driving the train right now,” said Baker. “There’s no way
they’ll have as big a jump in iPod sales this fall, but how well they do
with iPod is, I think, more important to them than picking up a few hundred
thousand extra PC sales.”

Analyst Bajarin said Vista wouldn’t have hit its stride this fall even
if it did ship as scheduled.

Years ago Microsoft spent millions promoting
the launch of Windows 95, and there were numerous news stories about people
camped out at computer stores till midnight to buy the first copies. But
Bajarin notes those were mostly the geeks and core enthusiasts, not
mainstream buyers.

“The early adopters jump in, but consumers don’t buy in a big way for the
first six months after release, and I think that’s when you’ll see Vista
having its biggest impact.”

For Apple, it’s biggest focus this year is to get all its computers and
notebooks switched to Intel processors.

So far it’s ahead of schedule and showing a
steely determination and marketing muscle far removed from its humble
beginnings in a Silicon Valley garage.

CEO Steve Jobs noted earlier this year that Apple’s 30th anniversary is fast approaching.

“You know,” said Jobs. “Apple was
founded on April Fools day in 1976. We thought that was funny at the time.”

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