Needham & Co analyst Charles Wolf is maintaining a 'Hold' rating on Apple stock - but has hopes that Mac sales will surge once the entire range move to Intel.

He expects the full product transition to complete by the first quarter of 2007. And he thinks that Boot Camp will be integral to future success. "Mac shipments could surge on the strength of the ability of Macs to run Windows applications," he wrote.

No Photoshop for Intel slows sales

The transition isn't without risks, the analyst said, citing the non-availability of Adobe Photoshop for Intel processors as an example.

"MacBook Pro and forthcoming PowerMac sales could experience sale postponements that extend into 2007," he wrote, "because Adobe is unlikely to introduce native versions of Photoshop and other design programs until early 2007. Apple's professional audiences, which are heavy users of these products, are likely to postpone their upgrades until they arrive," he observed.

Windows open on Apple

However, Apple's secret market share weapon - Boot Camp - could be integral to the company's future fortunes: "The driver of the sales upside will be the ability of the Mac to run Windows applications either through dual-booting or virtualisation," the analyst explained.

Wolf adds that he thinks Apple will extend Windows support in its future Leopard OS by adding a virtualisation engine that lets Mac users run Windows at the same time as OS X. At present users can only choose to boot into Mac or Windows operating systems.

"In our opinion, we believe there is a reasonable chance that Apple itself will build virtualisation into Leopard, the next version of Mac OS X, which should ship soon after MacWorld San Francisco in January 2007," he explained.

iBook imminent

Wolf sees Apple's Q2 as a good result in which the company "escaped" too much impact from its Intel transition.

"An inkling of postponed purchases reduced December quarter shipments. Postponements were undoubtedly higher in the March quarter. And they should continue at least through the September quarter and possibly into December," Wolf warned.

Products drive success, particularly in the consumer markets, and Wolf echoed industry consensus, saying: "We expect Apple to introduce a new
iBook with an Intel processor in time for the K-12 school-buying season, which begins in June. Without the new model, the season could be quite short."

Speaking during this week's Apple Q2 conference call, chief financial officer Peter Oppenheimer warned that gross margins would decline slightly in the current quarter, attributing this to the beginning of the K-12 buying season.

Wolf translates this as evidence of the debut of a consumer notebook that's set to capture education sales on the basis of price.

A 'moral victory' in Q2

Overall, it was a good quarter: "Apple shipped 1.11 million Macs in the March quarter, in line with our 1.15 million forecast.  In view of the fact that Apple introduced three new Intel Macs during the quarter and a significant number of customers most likely postponed purchases, we regard this number as something of a moral victory.  Shipments could have been far lower," he said.

Looking into the future for iPod sales, Wolf observed a slowing in sales growth for the product, and surmised that this would leave the iPod more susceptible to seasonal changes in buying patterns.