Originally published June 21 2005
Analysts predict Apple's deal with Intel will cost them in the short term
by Mike Adams, the Health Ranger, NaturalNews Editor
Apple's announcement that some models will soon include Intel's microprocessors, the very same chips used in Microsoft's PCs, surprised many customers in both camps; analysts predict that Apple sales will decrease in the short term, while customers wait for the new models to come out.
Last week, Apple Computer Inc. announced plans to deliver some models of its Macintosh computers using Intel microprocessors by this time next year, and to transition all of its Macs to Intel microprocessors by the end of 2007.
The same chip manufacturer whose processors drive most Windows-based PCs will soon design chips for the company hailed by fans as being everything Microsoft Corp. isn't.
Apple's decision left some wondering whether short-term sales of its current PowerPC line would plummet as prospective Mac buyers wait for the new Intel-chip-based computers to come out before making a purchase.
Steven Lidberg, an analyst at Pacific Crest Securities who covers Apple, said the move introduces potential risk not only from buyers deciding to wait it out for the new Macs, but also from the work involved in moving software to a new platform.
Duncan Stewart of Tera Capital said the fact that Apple is able to switch chips at all shows how irrelevant what's inside the machine has become for a company whose sales thrive on software and design.
"Apple has been a fashion company for some time now," said Mr. Stewart, who oversees the Dynamic Canadian Technology fund, which doesn't own Apple shares.
Apple's good fortunes may be in part due to the so-called "halo effect" -- the tendency of iPod users to purchase other Apple products.
Morgan Stanley analysts raised their price target for Apple in March after a study found that users of iPods had a 19-per-cent PC-to-Mac conversion rate, compared with analyst expectations of 10 per cent.
Apple currently controls about 3 per cent of the PC market, compared with an estimated 70-per-cent share of the digital-music-player market.
Apple finished 2004 as the second-best performing stock on the S&P 500.
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