Will Mac Minis Sway Windows Users?

Apple Computer's retail outlets will be critical in selling Mac Minis to Windows users, according to Needham & Co.

In a research note released to clients, analyst Charles Wolf postulates that with Apple "frequently described as a religion", the Apple Stores "have become the places of worship, succeeding brilliantly in spreading the gospel". And the introduction of the Mac Mini will help the stores in the task of, "attracting Windows users to the Mac platform and growing the Mac's market share", he writes.

In Store

IDC figures released Thursday showed Apple to be the fifth-place U.S. PC vendor, with worldwide unit shipments growing well in excess of the industry average in 2004, and a 0.1 percent rise in global marketshare, to 3.3 percent. Apple saw 25 percent growth in the quarter, in contrast to an industry average of 13.7 percent.

Since launch in May 2001, Apple Stores now deliver revenues of $2.2 billion per year--16 percent of Apple's worldwide sales, and 40 percent of Apple's U.S. retail sales.

The company had 101 stores open at the end of December, and plans to open 25 more this year, Wolf said, pointing out that sales per square foot are "more than five times higher" than typical mall-based stores.

Beyond IPod

However, despite the fact that 13 percent of Windows users will buy an IPod when they visit a store, just 1 percent of visitors bought a Mac.

"Sticker shock has been a major barrier to IPod-toting Windows users who've contemplated switching to a Mac. The Mac Mini, priced at $500, 60 percent below the third-generation entry-level iMac, promises to change this," said Wolf.

He continued, "The Mac Mini has effectively eliminated price as a barrier to switching, although other costs remain, such as the purchase of Mac OS X software applications."

Wolf believes that Apple's ace card is ILife, which the company will be able to demonstrate running on Mac Minis inside its stores, which he describes as "the ideal venue for selling the machine".

Wolf expects Apple will come close to selling a Mac to one in ten IPod-owning Windows users, simply by using those stores to show Mac Minis and ILife to them.

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