July 19, 2006 4:00 AM PDT

Apple hoping Mac attack lifts quarterly earnings

A small, handheld music player was responsible for vaulting one of the computer industry's most storied companies back into prominence. But it's the original Mac that has Apple Computer investors looking forward to Wednesday's third-quarter earnings call.

New designs, new features and snarky new commercials have been the highlight of Apple's renewed focus on pushing its personal computers. Analysts and investors are eagerly awaiting word Wednesday from company executives as to whether the new products and marketing strategies have paid off in terms of increased Mac shipments. The average estimate compiled by Thomson First Call points to $4.4 billion in revenue, and earnings per share of 44 cents, slightly ahead of the company's own guidance issued in April, following its skyrocketing iPod sales, financial analysts have been closely studying iPod shipment data as they prepare for Apple's earnings announcement. Some analysts say Apple has finally run into the inevitable law of large numbers: It's really, really hard to sustain eye-popping growth rates as the installed base of any product increases. A few analysts have trimmed their expectations for this year's iPod sales and Apple's overall performance. The company's stock price has also dropped from about $90 earlier this year to $52.90 at the close of trading Tuesday.

But Apple chose to focus on that other franchise, the Mac, during the first part of this year as it weaned itself off PowerPC chips in favor of Intel's new processors. With that transition nearly complete, analysts will be closely watching Apple's guidance for the second half of the year for signs of market share improvements and new directions for the iPod.

Even modest share gains on Apple's part will translate into a healthy addition to the company's financial results. At Apple's shareholder meeting in April, Chief Financial Officer Peter Oppenheimer said each percentage point of market share gained would translate into about $2 billion in revenue.

However, it's still early in the transition to Intel's chips to make a completely informed prediction about Apple's market share, said Shaw Wu, an analyst with American Technology Research. The new Intel-based MacBook, one of Apple's more popular products, didn't start shipping until the middle of May and likely took a little longer to become available in large volumes, he said. Also, Apple acknowledged earlier this year that it felt some pain from purchases that were delayed pending the introduction of the new Intel-based systems.

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But iMacs and MacBook Pros have now been available for several months, and the general interest in the new designs and new software needed for the Intel chips is providing a boost for Macs, Wu said. "Technology changes are what drive upgrade cycles, and that's what Apple is enjoying," he said.

Not only does Apple have new Mac designs to market, but it also has partially addressed one of the most frequently cited objections that Windows users brought up when asked if they would buy a Mac: the Mac's lack of compatibility with Windows applications. The beta version of the company's Boot Camp software allows Intel-based Macs to boot either Windows or the Mac OS. Apple plans to make this software a default feature in Mac OS X 10.5, scheduled for release later this year.

Boot Camp isn't a perfect solution, since users have to shut down one operating system to start using the other one. But it does let those who were tied to Windows applications for work or school use Macs, said Roger Kay, an analyst with Endpoint Technologies Associates. "Apple's done a very good job of explaining to people that there isn't a compatibility penalty anymore," he said. But other options are available: Those looking for a more seamless transition between the Mac and Windows computing environments can use products like Parallels' Desktop for Mac to run both operating systems at once.

Apple has also returned to mass-market retailers in its quest to move more Mac units. The company expanded a partnership with Best Buy earlier this year to test out Mac sales in several Southern California Best Buy stores. Apple will be closely watching the results of those tests to determine if the program will go national, said Samir Bhavnani, an analyst with Current Analysis.

It hasn't been the greatest of quarters for the rest of the PC industry, facing component weaknesses and softening demand. But those forces tend to have less of an impact on Apple because of its low market share, Wu said. Apple also has doubled its efforts to win customers in the educational realm, many of whom have to finalize their contracts in May, said Tim Bajarin, an analyst with Creative Strategies.

With the Intel transition almost out of the way, Apple can now focus on updating the iPod for the upcoming holiday season, Wu said. The always-rampant Apple speculators are pointing to enhanced video for the new iPods, as well as an iPod Nano casing that is more resistant to scratches. The company, as usual, has said little, but details about changes to the next-generation of iPods have trickled out, such as the news that longtime iPod supplier PortalPlayer will be excluded from the next generation of the Nano.

Even though iPod growth looks like it's slowed this year without a major product refreshment, Apple is one hit away from keeping that train rolling, Bajarin said.

"There are still a lot of people who have not bought iPods. When you look at how many people worldwide own PCs and are digital consumers, I could see Apple having a number of years ahead of them driving demand," Bajarin said.

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earnings announcement, Apple Computer, market share, Apple Boot Camp, Apple Macintosh

29 comments

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At Oracle the other day...
I saw several MacBooks.

If the focus is on quarterly earnings, who gives a hoot what OS
they were running at the time?

Although if I had to bet, I'd say a 30/70 split of Windows/
MacOS.

It's so funny to watch these reports come out in advance of the
earnings of every company - except News.com's biggest
advertisers.
Posted by Hep Cat (440 comments )
Reply Link Flag
MAC's attack ads...
I never buy from companies that spend their ad $$ attacking the others rather they telling me why they are so good. This is especially true when the attacks are false. To bad they dont just say why they think they are better& since they dont I can only believe that they cant.
Posted by kdnsd (2 comments )
Reply Link Flag
Disappointed in ads
Macs have so many benefits and look really nice so it would have been nice had the ads tried to focus on that rather than the "PCs suck" mentality preaching to the already converted. Instead we get some guy who hasn't showered or shaved for days saying that he is a Mac followed by a 1 second shot of the actual computer at the very end.
Posted by Charleston Charge (362 comments )
Link Flag
Mabey paying attention to the ads....
...would render some results in your case.
Posted by OneWithTech (196 comments )
Link Flag
Make Apple a true Enterprise Player for Sustained Lift in Earnings
As a customer that works with Macintosh in an Enterprise setting, I was interested by this story and interested in Apples next step. While I love the platform and love the companies vision of not sacrificing style for substance, I remain concerned that Apple does not seem to take the Enterprise market as seriously as they could or perhaps should. In the Federal space, Apple has dedicated precious few resources, and the resources that are there lack the tenacity to make an impact that will translate into gaining market share.

" Offer Share point type services using WEBDAV
" Make virtualizations a standard component of MAC OS X Server 10.5
" Include Replication services in the OS
" Embed Backup services into the OS
" Include functionality to allow OS to send faxes to an Enterprise Fax Server
" Embed Groove type File sharing and versioning into the OS

Collaboration is more than a simple buzzword, and the degree to which Apple can place the tools in the hands of all developers by embedding core technologies in the OS, I think it will lead to a more Enterprise focused functionality.

Finally, there must be some investment in the teams for various markets. With the switch to the Intel platform, Apple is now positioning itself in a way that an Enterprise can purchase a Mac, run Windows on it, and allow staff to boot into OS X when a specific application is required. Virtualization is clearly the better road, but I can understand the need to keep 10.5 on track. While I have been impressed with what has been done in the consumer market, it is time to amplify the halo effect with a solid plan to go after the market share of DELL, Lenovo (especially in the Federal space) ,etc. The attack Ads are a part of the Apple culture. They are brilliant, and funny. But when all is said and done, the real work needs to be done on strategy&
Posted by npole (3 comments )
Reply Link Flag
CNET is a bunch on idiots
How can you possibly expect Apple earnings to be strong when the Mac Pro is still a month away?
<a class="jive-link-external" href="http://www.techknowcafe.com/content/view/603/43/" target="_newWindow">http://www.techknowcafe.com/content/view/603/43/</a>
You guys are idiots. Earnings will not be strong until the holidays, the Mac Pro and new iPod nano hit the streets.
Posted by (156 comments )
Reply Link Flag
Calling a bunch of people...
...idiots without leaving your own name is just rude. Beside,
what do you do that would compare to what CNET does or even
what Apple does.

Are you really an analyst or just play one, cause if I made those
kind of claims I'd have the balls to put my name on it.

Justin Gund
Tech01
www.tech01.net
Posted by OneWithTech (196 comments )
Link Flag
Where is Apple's Future Heading Anyway
As a converted PCist to Apple as well as a Web Developer and
Designer you could imaging that one like myself wouldn't care
about where Apple is going.

But on the contrary, my company runs Mac's exclusively for
security purposes. Running Mac's ensures that my Web
Developers and Designers (the very people that shape the web
as we now it) maintain a safe development environment.
Although lately the funny **** that's been happening to my
personal G4 Laptop has left us with some serious meetings into
whether or not we can afford to have our Mac's come back from
lunch with Black Screens and then mysteriously loose there root
folders.

Being the super tech guru myself as well as super WEB
DEVELOPER; I can tell you that:
1. Safari still can't render web pages properly

2. My G4 with Tiger still's finds a need to spontaneously act like
a stubborn school boy who doesn't want to drink his milk.

3. The last 3 months of updates has left me with a sense of false
security in Tiger.

4. 3rd party Applications that are being built for Tiger and Mac
are becoming sub-par by any standards. i.e.. Photoshop CS2,
Dreamweaver 8, Fireworks 8, Flash 8, as well as a number of
other applications that seem to crash Tiger at a moments notice.

5. iDisk will crash your Mac and leave you with a sense of "What
the F*(K do I do now?" OH, hit the power button!

6. Parallels as already tapped the Dual Boot market and is ready
to blow up and yet no BootCamp! WHY? (Here's 30G worth of
free advice Apple, by Parallel's before it's too late)

7. The McAfree antivirus VIREX sucks and doesn't even give you
that warm and fuzzy feeling that AVG (www.grisoft.com) leaves
you (FYI Jobs, maybe you should also contact the peeps at
Grisoft. After all, I have been using AVG flawlessly for 4 years
now on all the PC's I manage. Thank you TechTV and
ScreenSavers aka AOTS.)

8. Mail just sucks! (another 30G worth of advice. ADD Calendar,
and Addressbook to Mail and create something that looks like
Outlook. That will definetily help!)
9. Give me a sense of security, fix security issues before they
become public. (FYI That would require a crew to constantly beat
up Tiger and any other future OS's. (You know my motto, beat
the **** out of yourself before anybody else, at least that way
you know how much you can take! I'm just kidding, I don't beat
myself, but my web apps leave my desktop with the utmost
sense of security in place.)

10.If your scared to restructure you'll never break the 15%
market-share and will continue to be second to Bill Gates or
worse yet...Steve Balmer!

I've been in the business long enough to form this opinion as
well as many more. Although my main battle resides in net
neutrality I need the help of my G4 to get me there! I've slowly
seen Apple put there software to the side of fancy hardware like
the iPod and such. It's time for Apple to retract itself back to
there core, the OS!

Justin Gund
Tech01.net
www.tech01.net
Posted by OneWithTech (196 comments )
Reply Link Flag
Apple is a hardware company
Justin said "It's time for Apple to retract itself back to there core, the OS!"

But it's obvious that Apple wants to be a hardware company and not a software company. As long as Jobs sits at the top it's likely Apple will remain a hardware company, that's always been Jobs' focus.
Posted by aabcdefghij987654321 (1721 comments )
Link Flag
just some comments...
most of your issues sound like bad ram, or a wonky usb device connected to the G4. Tiger on a G4 doesn't crash on it's own, nor does a root folder disappear unless something else is in the mix.

apple has no reason to buy parallels, this idea has been around for over 15 years, we may see them put their own virtualization software in Leopard, we'll know for sure on Aug 7th.

get rid of any virus software on your mac, let apple keep the os clean, not the end user. some of your old PC mentality might be causing the crashing, don't use virus software unless there becomes a problem. (which is highly unlikely at this point in OSX's life) or at least remove it for now, and see if some of your crashing clears up (besides bad ram/usb devices)

i agree on Apple Mail and Safari, I suffer through Apple mail, but I use Camino since it's a much better "Mac" browser.

Apple will always be a hardware company, but today they make more software than ever, they can make both and remain true to their core.
Posted by OS11 (844 comments )
Link Flag
Well...
1) use firefox, not Safari (though honestly Safari presents no problems to me - it's essentially a Mac port of Konquerer)

2) one number: 10.3.9 :)

3) ...false sense of security? Why? They're updates; the proactive defense is inherent in the system architecture, not the patches.

4) how so, exactly?

5) I don't use iDisk, so I don't know what to tell you there.

6) I use VPC 7 if I want a Windows environment that badly.

7) Buying AV products for a Mac is like buying snake oil.

8) One word: Thunderbird. I use it instead because I also use T-Bird on Linux

9) 'Warm and fuzzy' ain't in any computer professional's dictionary. You picked this profession - it didn't pick you. Welcome to the jungle (and yes, the OSX team does indeed fix issues aplenty before they become public, but IMHO I happen to like public disclosure of flaws, no matter the OS).

10) Apple is doing what they do best - providing a complete package that [i]just works[/i]. Sometimes I scratch my head at what they do (same with any OS vendor, really), but they seem to have their **** together more than most. Oh, and Apple has never been about 'just the OS'... ever.

/P
Posted by Penguinisto (5042 comments )
Link Flag
Some of your comments
The other guy already responed to each of the points you brought up. I just had a few questions.

In point 3, how is it that updates give you a false sense of security? To you security means never needing to update? How is it point 9 is a complete contradictory to what you just said? There you are asking for security issues to be fixed before they become public, to give you a sense of security. I thought updates gave you a false sense of security.

6. I'm not aware Apple promising a final version of BootCamp outside of MacOS X 10.5

10. <a class="jive-link-external" href="http://www.apple.com/software/" target="_newWindow">http://www.apple.com/software/</a>
Was there really a time when Apple was more focused on software than they are now? I'm not saying I'm right, I'm asking. Was there? And what were they?
Posted by nmcphers (261 comments )
Link Flag
www.tech01.lmao.com
Dude, you have some real serious issues.

Seriously now ... I am not kidding. If you actually think the mail
application sucks, it would only help if you explained why. If
you want Outlook, the purchase Outlook. Outlook is NOT the
definitive mail application.

Your post is just gloomy and too full of inapplicable metaphors
to really respond. However it's obvious you have issues.
* I've done ALL my upgrades on a G4 Mac Mini and a dual core
MBP. No problems.
* I don't use iDisk ... never really liked the idea unless it was my
own web site doing the storage.
* Photoshop, and Studio (which you mentioned) are not sub-par.
Granted they are not EVERYTHING but your issue with that
software is the merger of Macromedia and Adobe.
* You comment about Boot-Camp and Parallels was actually just
plain nonsense ... out of left field, from a ball park in the
Andromeda galaxy.
* Dude, you bought anti-virus software for a Mac?! If you are so
technical, you MIGHT have noticed that the only thing that
software does on a Mac is create additional messages and
unexpectingly blocks ports. Ever have your IM magically not
work, or your printers disappear? Its that SHEIT that someone
convinced you to buy for not good reason and install it on your
computer.
* Ahhhh yes ... "Fix security issues before they become public" ...
after reading that line, I can only conclude that you are a
PROPAGANDIST POSTER. Security issues .... well, is guess your
super skills are just as imaginary as your problems, not
including your mental faculties of course.
Posted by Thomas, David (1947 comments )
Link Flag
Tech guru - heh heh...
Let me respond to your comments, please!

Being the super tech guru myself as well as super WEB
DEVELOPER; I can tell you that:
1. Safari still can't render web pages properly

Tech guru my ass. Boy, if you can't keep your Macs up and are
having tech problems, you either need to take a class or take
them to a Mac Guru at your local store. Did you install the OS
and the RAM yourself? Perhaps that's the problem. My Macs
don't crash - ever. If you are a techie, use your brain and find
out why!!! Oh, and if your pages don't render properly in Safari,
they are probably not using HTML standards. "Super Web
Developer". I don't think so. Cite some examples if you think this
is true.

2. My G4 with Tiger still's finds a need to spontaneously act like
a stubborn school boy who doesn't want to drink his milk.

See point #1 above. Your machines are crashing and you are the
tech guru responsible. Hmm, I see a pattern here.

3. The last 3 months of updates has left me with a sense of
false
security in Tiger.

OK, so you think that security updates that come out prior to
any attacks are not good. What would you suggest instead? Wait
until an attack? No, you fix when you can and release when the
fix is ready. "Super Web Developer" does not equal software
developer, obviously.

4. 3rd party Applications that are being built for Tiger and Mac
are becoming sub-par by any standards. i.e.. Photoshop CS2,
Dreamweaver 8, Fireworks 8, Flash 8, as well as a number of
other applications that seem to crash Tiger at a moments notice.

Yes. You should always judge Apple by what Adobe does. &lt;/
SARCASM&gt;

5. iDisk will crash your Mac and leave you with a sense of "What
the F*(K do I do now?" OH, hit the power button!

What are you doing with iDisk that makes your whole Mac
crash?!?! Please see item #1 above.

6. Parallels as already tapped the Dual Boot market and is ready
to blow up and yet no BootCamp! WHY? (Here's 30G worth of
free advice Apple, by Parallel's before it's too late)

What the fsck are you talking about, Cartman? Boot Camp does
what it needs to do. Most people would complain if Apple
decided to compete against Parallels, or to outright buy them.
You leave your 3rd party developers in business to continue to
support your platform! Again, you are not a software developer.


7. The McAfree antivirus VIREX sucks and doesn't even give you
that warm and fuzzy feeling that AVG (www.grisoft.com) leaves
you (FYI Jobs, maybe you should also contact the peeps at
Grisoft. After all, I have been using AVG flawlessly for 4 years
now on all the PC's I manage. Thank you TechTV and
ScreenSavers aka AOTS.)

OK, so turn the **** off. I've never used antivirus software on my
Mac. I had one virus, back in 1986, I think. I'm probably
connected a helluva lot more than you. Use your security
settings and take care of the issue that way.

8. Mail just sucks! (another 30G worth of advice. ADD Calendar,
and Addressbook to Mail and create something that looks like
Outlook. That will definetily help!)

Yeah, that's the answer. Outlook is a bloated, buggy piece of
****. Mail apps should be used for email. Calendar apps for
calendars, etc. I repeat, you ARE NOT a software developer.
Please see previous items above.

9. Give me a sense of security, fix security issues before they
become public. (FYI That would require a crew to constantly beat
up Tiger and any other future OS's. (You know my motto, beat
the **** out of yourself before anybody else, at least that way
you know how much you can take! I'm just kidding, I don't beat
myself, but my web apps leave my desktop with the utmost
sense of security in place.)

You tell me the security issues you have right now that Apple
has not fixed. Yes? I'm waiting.....

10.If your scared to restructure you'll never break the 15%
market-share and will continue to be second to Bill Gates or
worse yet...Steve Balmer!

You want Steve Jobs to take business advice from a self
proclaimed "tech guru" that can't make a Mac stop crashing? No,
you want him to run his business like Microshit? Hmm, OK. I
guess we'll see Leopard announced in January, but it will finally
ship in 2011. Good idea.

I've been in the business long enough to form this opinion as
well as many more. Although my main battle resides in net
neutrality I need the help of my G4 to get me there! I've slowly
seen Apple put there software to the side of fancy hardware like
the iPod and such. It's time for Apple to retract itself back to
there core, the OS!

It's nice to know you've been in the business long enough to
develop these opinions and many more. That's about 5 minutes.
Opinions are like ********, everyone has one and yours suck.
Posted by i,Jimbot (65 comments )
Link Flag
get over it...
First of all the ads are tongue in cheek and kind of funny. I know
plenty of PC people who think they're funny. Dosen't make them
want to switch but they find the commercials entertaining, which
is what they're supposed to be.

And come on!!! How many companies don't compare themselves
to their competition. We've seen it all a billion times and will
continue to see it.

SOme of you guys should quit being so damn sensitive!!
Posted by Musica360.com (106 comments )
Reply Link Flag
Commercial should give specifics
Like how fast is the processor? How much memory and how big is the hard drive? These are the 3 primary values that many consumers base their computer buying decisions on.

But then again, after seeing other commercials... i.e. a bear eating cereal, how beer makes a man beautiful in a carribian bar (horray beer?), just about every dog food commercial, etc, etc... I can't say the apple commercial was all that bad in the least. The dell dude was much more annoying.
Posted by Seaspray0 (9714 comments )
Reply Link Flag
Spec bore average customers
Effective commercials are supposed to engage the audience and get them talking about it. Even the PC nerds that are offended by the commercials are engaged in talking about them and getting other people to look at the ads. There is an old saying, there is no such thing as bad publicity.

Only a small niche of ubernerd will give a damn about specs and they probably would not buy a mac in the first place.
Posted by aristotle_dude (165 comments )
Link Flag
Specs bore the average joe consumer
Effective commercials are supposed to engage the audience and get them talking about it. Even the PC nerds that are offended by the commercials are engaged in talking about them and getting other people to look at the ads. There is an old saying, there is no such thing as bad publicity.

Only a small niche of ubernerd will give a damn about specs and they probably would not buy a mac in the first place.
Posted by aristotle_dude (165 comments )
Link Flag
30 seconds is too short
I think using up precious commerical time to talk about things
like processor speed and hard drive size would be a waste. In
the Windows PC world, those things might be more important to
distinguish different machines from each other, but Apple needs
to sell the *platform*. They have to tackle things like people's
fears about lack of software and compatibility, hence the
frequent mentionings of running Microsoft Office. Then, sell the
iLife kind of stuff and overall stability. This is basically what the
ads did. People can spec machines out if they are interested.

For me, I wish there were a little more time devoted to showing
the actual hardware doing the kinds of things the "Mac" guy
talks about. The iMac and Mac mini are so different from the
usual PC form factor that Apple should really call attention to it.

It's amazing how little Apple has actually done in terms of TV
ads showing its hardware and its OS. It finally runs some ads
that aren't iPod-related, and we barely see the actual computers.
Posted by Thrudheim (306 comments )
Link Flag
Wait for Apple's Press Conference...
@ 2PM Pacific Time &#38; THEN you will know what the story is.

Anything before that is just FUD + Speculation.
Posted by Llib Setag (951 comments )
Reply Link Flag
rumor has it...
That the new Caruso chip will be added to the IntelMacs when Apple releases their NEW OS "Leopard", supposedly WAITING until MSFT releases "Vista" OS to sorta take the wind out of the new MSFT release...

While the iMacs are certainly pretty, they could use a BOOST in chip power! Most PC's available today are MORE POWERFUL...

Also, Apple should INCREASE basic RAM to ALL their computers, 512 megs is INSUFFICIENT! Just add MORE RAM NOW APPLE! Certainly makes MULTI-TASKING much easier...:-)
Posted by gary85739 (613 comments )
Reply Link Flag
512MB is fine... here's why...
please understand that apple and every manufacture ships machines with a baseline amount of ram because it helps the consumer "choose" the correct amount. If apple shipped them with 1GB, some peoople would would want 1.5, or 4, then they would loose the 1GB or one of the 512MB chips in the process.

you always want to ship machines with a "baseline" amount, then let the customer decide.

512MB is plenty for most tasks, but if you want more you are free to do add it, but raising the price for everyone buying a machine doesn't make economic sense.

-
Posted by OS11 (844 comments )
Link Flag
www.apple.com
Then listen to QuickTime Audio of press conference &#38; questions from reporters @ 2PM Pacific.
Or simply read Apple written Press Release of the quarterly report to get the facts.

Anything else is FUD + Speculation or regurgitation with a spin factor.
Posted by Llib Setag (951 comments )
Reply Link Flag
Best Buy on IPod Sales
From today's Reuter's new wires:

"However, an executive at top U.S. consumer electronics retail chain Best Buy Co Inc. suggested there was a ceiling to Apple's ability to expand the market for iPods, which carry a premium price to rival digital music players.

"Apple has done an amazing job of creating a simple and easy to use (system) with iTunes and iPod," Michael Vitelli, senior vice president of Best Buy's consumer electronics division, told Reuters. "The problem I see is, how many more people want to spend $200 or $300 to listen to music?"
Posted by john55440 (1020 comments )
Reply Link Flag
at least 8 million did
Well how many will pay that...it appears that 8 million peolple did last quarter...up 32% over year ago quarter...it seems for the past 2 years every analyst has said apple can't continue to grow the iPod...well word to analyst....you don't know jack...the growth continues (yes eventually the growth will slow, but slow growth is still growth....
Posted by grossph (172 comments )
Link Flag
 

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