Report studies the iPod halo effect

Market research firm EndPoint Technologies has published a report focusing on the so-called iPod halo effect and whether it is real or not. The halo effect basically states that Apple Computer is selling more Macintosh systems because consumers are so taken with the iPod.

Authored by EndPoint President and longtime industry analyst Roger Kay, the report looks at arguments for and against the existence of the halo effect.

Those that say the halo effect does not exist contend that Apple’s Mac shipments are up because the company is coming off historic lows. Another factor cited for the increase in computer shipments is the upgrade cycle, which happens every few years.

According to the report, the reasoning goes that, under these circumstances, if there is a halo effect — discounting the recent rise as nothing but cyclic buying behavior and given that Apple’s share remains near historic lows — then the demand for Macintosh systems must be that much worse, since without such an effect, the company’s share would be even lower.

” My own belief is that this view represents an unduly harsh interpretation of the facts,” said Kay. “Apple’s share did decline steadily from a worldwide high of around 10% in 1992 to about 2% in 2004. I attribute this swan dive to two policies: a lack of openness (i.e., not licensing the OS and not establishing a healthy partner ecosystem) and a price umbrella, which let the whole PC market squeeze through underneath.”

Apple’s market share hit 16 percent in 1986, falling to 10 percent by 1993 and continued to decline into the 2000s. Kay said that rather than draw a trend line straight down from 1993 to the present, another way to parse the Apple market share data is to divide it into periods: Before the Fall (the 1980s and early 1990s), the Great Fall (1994-2002), the Bottom (2003) and the iPod Era (2004-present).

“Whether any of this makes any difference is a matter of perspective: from Apple’s point of view, business is up, profits are up and shareholders can be happy, not just because of iPods, but Macs as well,” said Kay.