Analysts: Design, quality could drive holiday sales for Apple

Jim Dalrymple
12 December, 2008
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Technology companies are not immune to the struggles an economic downturn brings to consumers, especially around the holiday shopping season. But although Apple hasn’t commented on its recent sales and we won’t see the next quarterly sales figures until January, the analysts Macworld spoke to think that all signs point to a good season for Apple.

Ironically, the perceived higher cost of Apple’s products (a topic of endless debate) might not be an impediment to the company’s success. It may be the higher prices, combined with unique design and quality-built products, that are leading Apple to a successful holiday sales season.

“Economic slowdowns don’t stop spending, but it means people will be more careful what they spend their money on,” Michael Gartenberg, vice president of market research firm JupiterMedia and editor of the MobileDevicesToday blog, told Macworld. “In many cases they will spend their money on premium products that represent good value for the dollar—for many people that’s not necessarily the cheapest product.”

Over the past few years, Apple has made some significant moves to ensure its products are available to almost every segment of the market. For example, Apple sells iPods at many different prices, which gives the company an opportunity to up-sell customers who are looking for more features or capacity. But that broad spectrum of models gives consumers a way to save money, as well.

Selling less-expensive models may not seem like the best option for a company, but it’s better than not getting a sale at all, which is what is happening with many products these days.

The multifunction nature of the iPod and iPhone is also having a big impact on consumers. If a family had plans to purchase a portable gaming system and an iPhone for the holidays and decides one of those products had to go, it most likely won’t be the iPhone.

“In a sense the iPhone provides a much more versatile platform and consumers are understanding that,” said Tim Bajarin, president of consulting firm Creative Strategies.

The iPhone provides users with a phone, an iPod, and a gaming platform—not to mention the functionality that’s available with the 10,000 applications available on the App Store.

“People tend to spend on things that give value across the board,” said Gartenberg. “Apple has done a great job of demonstrating the value of their products.”

Gartenberg also pointed out that consumers are also thinking that they can’t afford to make a mistake with their purchase, because they can’t go buy another product to replace it.

Apple’s ease-of-use and the integration of its products is being touted by both analysts as a big factor for consumers this holiday season. And the value that customers get from each Mac purchase is another factor that they’ll look at more closely.

For instance, each Mac comes pre-installed with the iLife ’08 suite of applications, made up of iWeb, iMovie, GarageBand, iDVD, and iPhoto. Users also get the ability to run Windows using Boot Camp, Leopard’s Time Machine backup software, the Mail e-mail application, address book and calendar applications, and more.

“The integration is always really important,” said Bajarin. “If you look at the all the software you get on a Mac and compare it to a PC, you’ll have to jack up the price on the PC. The whole issue of ease-of-use and friendliness has really resonated with families.”

Black Friday and Cyber Monday bode well. Piper Jaffray analyst Gene Munster, who tracked Apple’s Black Friday sales, feels the company will have a strong holiday season. According to Munster’s observations, Apple was selling an average of 13 Macs per hour on Black Friday, up from the two per hour recorded by Munster and his team in early November.

The iPhone could also see a boost in sales, with Munster recording an average of 3.4 sales per hour on Friday. That’s up from the 1.3 per hour in early November.

It’s not just in retail stores that Apple is doing well. Apple’s Web site was the fifth most-visited retail site on Cyber Monday, according to new research by online measuring firm ComScore.

On Cyber Monday Apple’s Web site had 3.6 million unique visitors, which represents a 43-percent increase over the November average of 2.5 million daily unique visitors. Apple was the only computer-maker to break the top five retail sites on this year’s Cyber Monday.

Other computer companies that made the list include Dell with 2.3 million visitors and Hewlett Packard with 1.9 million visitors, representing a 53-percent and 94-percent increase over their November average, respectively.

Bajarin said he expects Apple to have a “good season selling iPods.” Add in Munster’s iPhone and Mac sales observations, and it looks to be a successful holiday season for Apple.

“Even in downtimes there is still going to be demand for high-quality products,” said Gartenberg.

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