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  • The Apple Financial Report: Yes, Mac Sales Were Hurt by Intel Transition

    January 21st, 2006

    Although Apple isn’t giving us any specifics, it did admit in its conference call with financial analysts that some people are sitting on the sidelines awaiting an Intel-based Mac. Although sales of 1,254,000 Macs in the last quarter were 20% above the same quarter in 2004, some Wall Street analysts weren’t terribly pleased. They expected more.

    It doesn’t take crystal balls, though, to suggest that sales of the iBook and Mac mini might have been the main victims of this holdback. They haven’t been updated in a while. In addition, with few exceptions, rumors and speculation suggested these models would be the first to go MacIntel. How that stands now is anyone’s guess. I suppose some will decide not to wait any longer and place their orders. Others will consider paying extra money for an iMac or a MacBook Pro, but I expect that some will continue to hold off buying until more models make the transition.

    Some of last quarter’s sales figures were already disclosed by Steve Jobs during his Macworld keynote last week, so I’ll be brief. Besides, the numbers are already at Apple’s site, so there’s no sense simply repeating the press releases or financial data, except for a brief summary. With sales at a record-shattering $5.75 billion, net profit was $565 million, or 65 cents per diluted share, which were also records. Sales of the iPod totaled 14,043,000, an increase of 207% over the previous year.

    As far as this quarter is concerned, Apple is predicting a typical seasonal slowdown, with projected sales of $4.3 billion and earnings of 38 cents per share. I gather they’re also being conservative about expectations, since it’s still not known to what extent the Intel transition might influence sales. Regardless, Apple sold 667,000 desktop computers, and 587,000 laptops. Alas, there are no model-by-model breakdowns, so it’s a guessing game, although Apple did admit the iMac was quite successful. I just wonder how those folks feel now that last month’s new computer is this month’s obsolete model.

    At the same time, it may actually make sense to look at a closeout iMac G5 in light of the first round of tests on the MacIntel version from my friends at Macworld. Although Apple claims the Intel-based iMac is more than twice as fast as the previous model, the initial tests from Macworld show they are actually from 1.1 to 1.3 time as fast. This is still pretty respectable, since the computers are selling for the same price as the previous version. On the other hand, it’s also true that the Rosetta emulation scheme cuts speed in half and then some.

    Before you begin to look down at the prospects of the Intel transition, consider my comments yesterday on the subject. The first tests of the new products only confirm my conclusions. What’s more, as time goes on, Apple and its developers will get a better handle on optimizing performance for Intel, and Intel will be busy rolling in ever-faster processors.

    The real question is whether you should be an early adopter, or just wait for the dust to settle down?

    This is a really hard question, as the Intel-based iMac is still too new to know if there are any show-stopping bugs. But as shipments grow, a trend will reveal itself. If you have a fairly old Mac, anything from the current product line will yield a respectable performance boost. If you can ditch Classic, a MacIntel would be an ideal choice, whether an iMac or the forthcoming MacBook Pro. On the other hand, the professional users among you would be well advised to consider a dual-core Power Mac. Apple won’t complete its Intel migration until the end of the year, and the Power Mac and the Xserve are expected to lie at the bottom of the upgrade list.

    At the same time, the applications you need for your work may not appear in Universal form for a while. Apple will do its part come March with Final Cut Pro and others. Although Microsoft is committed to building a Universal version of Office, they won’t say when. In fact, they won’t even commit to a fast-track development schedule for Virtual PC, which is a critical factor if you must run a Windows application. Of course there are third party alternatives, but how good they are isn’t known yet. What’s more, don’t expect to see a Universal version of Adobe’s graphic apps until late in the year.

    I’m not trying to throw cold water on your plans to buy a MacIntel, just some cautionary notes. Do you really want to function for six or nine months with lower productivity awaiting a Universal version of the software you need? This is something you will want to weigh carefully before you place your order.

    Clearly Apple’s conservative guidance for the present quarter is also based on those considerations. And no prodding on the part of Steve Jobs will spur Adobe or Microsoft to build their Universal applications faster. It’s going to be a time-consuming process, requiring lots of hard work, and you really want them to make sure everything runs properly rather than rush a release date.



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