The "iPod Halo Effect" - How Real Is It?
It wasn’t that long ago, a year perhaps, when Apple’s stock was selling at $29 a share. Today, it is listing at $100, making me wish I had bought some. Why is it so high? Because one financial analyst is predicting that Apple will once again wind up with double-digit market share. The prediction is based on a survey of iPod users and shoppers that asked if they were considering buying a Mac. A large percentage of them answered they were.
The design of Apple’s G5 iMac is based on the iPod in the hopes of cashing in on the “halo effect” of the iPod’s success. The “halo effect” theory states that people who use the iPod and like it, especially people who have not owned an Apple product before, will be drawn to the brand by the device. And there seems too be some truth in that. But is it really all that it’s being cracked up to be? I have my doubts.
I’ve been shopping for airplanes lately. One thing I’ve learned about buyers from that experience is that there is often a wide gap between “wants” and “will do’s”. My bet is there are a lot of people out there thinking about switching to a Mac because of the iPod; but the percentage of them who will actually make the move are small, though perhaps as large as 15%. Why do I say that? Let me share a recent personal experience.
This weekend I was in the local MicroCenter getting ready to buy a new G5 iMacs. I wanted to give myself one last look at one before deciding to make the purchase. The PowerMac and iMac display models are set up on a square table offset from the center of the room. A very tall gent with thinning blonde hair and black eyeglasses sat slouched in a chair in front of the 20 inch G5 iMac rubbing his chin. A salesman was standing next to him and they were talking about the machine. The prospective buyer was asking about compatibility and mumbled something about viruses. The salesman was a Mac user and told him he had never had a virus, but I could tell the buyer was still afraid to make the switch even though he was tired of dealing with Windows. In the end, he got up from the table and wandered back into the PC department.
There also were lots of folks wandering in to look at iPods. Those who had PC’s made sure the salesmen knew it, and they did not look at Macs.
In those two categories of buyers, I believe you have most of the new iPod market. And if I’m right, Apple stock is overvalued, and the market at some point will make a correction.
This is one time I’d like to be wrong.
The design of Apple’s G5 iMac is based on the iPod in the hopes of cashing in on the “halo effect” of the iPod’s success. The “halo effect” theory states that people who use the iPod and like it, especially people who have not owned an Apple product before, will be drawn to the brand by the device. And there seems too be some truth in that. But is it really all that it’s being cracked up to be? I have my doubts.
I’ve been shopping for airplanes lately. One thing I’ve learned about buyers from that experience is that there is often a wide gap between “wants” and “will do’s”. My bet is there are a lot of people out there thinking about switching to a Mac because of the iPod; but the percentage of them who will actually make the move are small, though perhaps as large as 15%. Why do I say that? Let me share a recent personal experience.
This weekend I was in the local MicroCenter getting ready to buy a new G5 iMacs. I wanted to give myself one last look at one before deciding to make the purchase. The PowerMac and iMac display models are set up on a square table offset from the center of the room. A very tall gent with thinning blonde hair and black eyeglasses sat slouched in a chair in front of the 20 inch G5 iMac rubbing his chin. A salesman was standing next to him and they were talking about the machine. The prospective buyer was asking about compatibility and mumbled something about viruses. The salesman was a Mac user and told him he had never had a virus, but I could tell the buyer was still afraid to make the switch even though he was tired of dealing with Windows. In the end, he got up from the table and wandered back into the PC department.
There also were lots of folks wandering in to look at iPods. Those who had PC’s made sure the salesmen knew it, and they did not look at Macs.
In those two categories of buyers, I believe you have most of the new iPod market. And if I’m right, Apple stock is overvalued, and the market at some point will make a correction.
This is one time I’d like to be wrong.
posted by Andy Foster at
2:59 PM
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