With Apple's second-quarter financial results due today analysts are making last minute predictions and forecasts based on Apple's announcement of a shipping date for Tiger, and the ability of the iPod to bring new users to the Mac platform.
While the industry has been watching the adoption of the iPod, looking for the "halo effect" as iPod users switch to the Mac platform, UBS Investment Research expects that software will become the next big thing for Apple, and that Tiger will pull even more to the Mac.
UBS analyst Ben Reitzes expects that the launch of Tiger will have "a more dramatic effect" than the launch of Mac OS X 10.3 Panther in October 2003.
"We believe the math behind Apple’s software potential is attractive, making estimates conservative," the analyst said, reports Apple Insider.
Reitzes believes that Apple’s software is extremely well suited for "the digital lifestyle that consumers are rapidly adopting". He also notes that Microsoft's delays for Longhorn, and its battles with viruses, means "the time is right for Apple to regain share on the back of Tiger."
"Over 10 million Apple users have still not upgraded to systems that run OS X, and we believe that Tiger may push many over the edge."
UBS said Apple should benefit two months worth of Tiger sales in the June quarter. Reitzes expect that the new Spotlight, Dashboard, and iChat features in Mac OS X 10.4 Tiger will fuel growth. The analyst also believes the upgrade will be adopted by the 14 million active Mac OS X users.
UBS said the revenue opportunity for Apple's software could be significant. "In fact, one could argue that with its new stores, an enhanced online store, and broadened distribution, this could be Apple’s year to see its software sales surge," Reitzes said.
iPod wears a halo
Apple's second-quarter financial results due today, are expected to further highlight the success of the iPod. Piper Jaffray analyst Gene Munster has suggested that investors should look beyond the iPod and view it as something that is building demand for the entire Apple product line.
He estimates that more than 30 million iPods will have shipped by the end of 2005, boosting sales of other Apple products in what is described as the Halo Effect. Apple has sold 10 million iPods since the product launched in 2001.
Munster issued a research note saying: "Apple's domination in digital music is a critical piece to the story. But we don't believe that iPod is the only potential growth avenue for the company."
According to Munster there has been greater demand for the iMac, PowerBook and Mac mini computers during the past quarter.
Like Munster, Goldman Sachs analyst David Bailey expects Apple to beat Wall Street estimates, despite the quarter being a weak one for consumer spending. He raised his forecasts on Apple based on demand for the iPod, the Mac mini and the PowerBook, reports MarketWatch.