Will Intel move impact iPod's 'Halo' effect?

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Over the last few years, as iPods have come to symbolize the Apple brand, the company’s computers have taken something of a backseat to its music players. But Apple signaled something of a change in direction at this year’s Macworld Expo, bringing the Mac to the forefront once more, emphasizing the “Mac” in Macworld Expo, while hardly mentioning the iPod other than to go over sales numbers.

There was a good reason for this, Apple’s new systems with Intel chips represent a major departure for the company; a change in its architecture. The company wanted to focus on its new systems, the iMac Core Duo and Mac Book Pro, rather than new or revised iPods. Apple obviously wants consumers to focus on these machines as well, hence the dearth of iPod announcements at Macworld Expo.

Yet the iPod has helped reinvigorate Apple to a significant effect. Much has been made of the so-called “ halo effect ” which posits that as more consumers buy iPods and become enamored with the Apple brand many of them will migrate over to the Macintosh platform. Indeed the company’s operating system market share has grown along with the iPod’s surging popularity, and it is now the fourth largest vendor of personal computers, though it still commands less than five percent of the market in the United States.

What the Intel-based systems will mean for Apple remain to be seen. If the new Intel chips create confusion among consumers, Apple risks tarnishing that halo and seeing a dip in its numbers. On the other hand, for those consumers considering making a switch from Windows to the Mac, the familiar Intel chip could make that transition seem less troubling. But for now, at least, analysts aren’t expecting the change to make too much of a difference.

“Certainly we’re seeing some continued growth in the space now,” said JupiterResearch analyst Michael Gartenberg. “Apple’s ship numbers were up even after it announced Intel Macs. The fact that they’re Intel-based rather than PowerPC-based isn’t going to be much of a factor for most people at this time. You’re either going to wait, or go ahead and buy one based on any number of other reasons.”

One of those other reasons might be the Apple retail stores themselves, where iPod customers can be exposed to the company’s full-range of products. This, say some analysts, is where Apple’s halo really shines.

“I think to the extent that [the halo effect] exists it’s been driven a lot by Apples retail presence,” said NPD analyst Ross Rubin. “There’s a lot of awareness of Apple stores, and people going in to buy an iPod or iPod accessories are exposed to the Macintosh. So I do think we’ll continue to see that exposure taking place, particularly if Apple continues to expand its retail presence, it leads to a lot of cross-marketing opportunities.”

Though doubtlessly there is a small (but vocal) subset of Mac users to whom the Intel transition is a big deal based solely on the chip architecture, it’s not something that most consumers care about, analysts say. Most are going to be concerned with performance, not what drives that performance.

“Most consumers aren’t paying that much attention, they’re focused on function not what chip is powering the computer,” says Gartenberg.

And according to Macworld’s initial tests, the Intel chips aren’t producing the dramatic gains that Apple claimed when it announced them at Macworld Expo. What’s needed to draw in new customers, says Rubin, are universal applications—those designed to run on both Intel and PowerPC systems.

“Of course what [consumers] care about are applications,” says Rubin. “If they are Photoshop users, Office users, Final Cut Pro users, once those programs are available as universal binaries, if in side-by-side comparisons the Intel versions do much better, that will probably get their attention.

But oddly enough what could change all that to make the Mac a more compelling system, say analysts, is Windows. When potential switchers walk into an Apple store for an iPod accessory and see a Mac system running Windows applications, it could pose a powerful argument.

“In terms of the whether having the Intel chip itself is going to make a material difference for a lot of switchers, it could once Apple solidifies its Windows compatibility message,” Says Rubin. “So if we have to wait until Vista for Macs that can boot both operating systems, or perhaps Microsoft will release a version of Virtual PC or there will be some solution, some option, that allows consumers to easily run Windows at good speeds; I think that will be a strong message. It will be very attractive to Windows users because they could make transition at their own pace.

“I think consumers don’t care, but they see them as two different types of computer,” says Gartenberg. “They know they’re not going to buy an Apple system that runs Windows. That may change if these Intel-based systems are running Windows as an option. At that point it will be very interesting to see consumers say ‘I didn’t want to commit to Apple, but if I can run Windows and do it on an Apple system then I have the best of both worlds.’”

Mathew Honan is a San Francisco-based writer and photographer. His work has also appeared in Macworld, Wired, Time, and Salon.

For more on the iPod, please visit the iPod Product Guide.

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