[Mb-civic] An article for you from an Economist.com reader.

Tue Jan 31 01:54:25 PST 2006

- AN ARTICLE FOR YOU, FROM ECONOMIST.COM -

Dear civic,

Michael Butler (michael at intrafi.com) wants you to see this article on Economist.com.

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PODTASTIC 
Jan 12th 2006  

The iPod has turned Apple into a superbrand

IT WAS on millions of wish lists over the holiday season and few other
brands got a look in. In the three months to December 31st, Apple sold
14m digital music players, compared with 4.5m in the same period in
2004. The iPod defines a product category, as Sony's Walkman once did
when music was delivered on cassette instead of over the internet. And
with Apple's iTunes Music Store accounting for 80% of legal music
downloads, the Californian company now has a brand that marketers hold
in awe. But can Apple also use its new brand power to sell more
computers?

At Apple's annual Macworld event on January 10th, Steve Jobs, the
company's chief executive, unveiled what many fans had been expecting:
the first Macintosh computers based on chips made by Intel, which also
power the vast majority of personal computers that run Microsoft's
Windows operating system. Apple hopes the high performance of its new
Intel-based Macs will help it take market share from makers of
Windows-based PCs.

But the "halo effect" from the iPod remains Apple's most effective
means of boosting sales of its computers. Surveys suggest that some
10-20% of PC users who buy an iPod subsequently go on to buy a Mac. In
2005 the iPod helped the company to increase its share of the
personal-computer market from 3% to 4%. Apple's challenge is that
getting people to buy an iPod, a new type of device, is easier than
getting them to switch loyalties in an existing product category.

 The most powerful factor working in Apple's favour is peer pressure:
what friends and relatives have to say about products is now the most
trusted form of consumer advice, and to be seen with something
different can be almost taboo. That is why millions of people said they
wanted an iPod for Christmas, and not a digital-music player from
another manufacturer--even though rival players are often cheaper than
iPods, and generally have more features. During the years it spent in
Microsoft's shadow, Apple benefited from having a distinctive,
counter-cultural brand. But given its dominance in digital music, where
it is anything but the underdog, how long can Apple keep its cool?

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