Apple's iPod Halo Effect

As most stocks in the market opened lower today, Apple Inc. (AAPL) rose $1.41, or 2.2%, to $67 on the INET electronic stock exchange after closing at $65.59 on the Nasdaq Friday. The surge no doubt was due to an upgrade to "strong demand" by Keith Bachman, analyst from Bank of America, due to the success of the company's notebooks and the anticipated launch of a new iPod Nano later this year.

Peter Oppenheimer, Apple's CFO, says, "the MacBook, which we introduced in mid-May, has been extremely well received and coupled with our very popular MacBook Pro has contributed to Apple's increased unit marketshare of portables in US retail." Bachman attributes the MacBook's success to competitive pricing "in the sweet spot of the market" and he feels this will continue fueling sales of the company's MacBook Pro laptop computers.

Many of Apple's prior products were sold at a much higher market price, when compared to those offered by Dell Inc. and Hewlett Packard Co. Now that Apple has began matching other PC makers' prices many are beginning to switch over to the very popular and reputable brand name. The MacBook and MacBook Pro are selling well enough to push Apple's take of the portable computer market in June up to 12%. This is up from 6% recorded in January during Apple's second quarter earnings report.

With Apple shares up close to 2 1/2 points thus far today (and over 10 the past week), don't expect the stock to slow down anytime soon. The MacBook Pro is taking off due mostly to the halo effect, where iPod owners become interested in Apple computers. I can say that this trend, most notable in students, was one of the primary reasons why my college roommate and my younger brother (senior at The Hotchkiss School) both purchased the MacBook Pro earlier this summer. Also the release of Boot Camp, a software program that allows Windows XP to run on Mac machines, has led many, including myself, to view Mac's as a high quality, if not the superior product. What's more, with the hint of the iPod Phone in the works, look at that to take off in the same way as the Motorola Razr swept through college campuses this past fall.

Matt Himler is a sophomore at Amherst College where he plans to major in economics and political science.