Survey: Apple to reap reward of stronger consumer confidence

But lack of netbooks could stymie Apple's growth, adds analyst

The first uptick in consumer confidence in 17 months is good news for Apple Inc., market research firm ChangeWave said Thursday.

According to Paul Carton, ChangeWave's research director, the company's April survey of 3,200 consumers showed a two-point increase, from 6% to 8%, in the number of people who said they planned to buy a laptop in the next 90 days -- the first gain since November 2007.

If it pans out, the increase means Apple can breathe a little easier. "The economy is finally starting to move in Apple's direction," Carton said during a conference call Thursday. "Overall, laptop sales look like they'll be hopping in the future, and that means Apple is well-positioned going forward."

Carton based his optimism on the fact that, of those consumers who said they would buy a laptop in the next three months, 29% planned to buy an Apple laptop. While that number is down a point from February, it's up two points from January.

That would be good news for Apple, which last month said it had sold just 2.2 million Macs -- 1.4 million of them laptops -- to report its first year-to-year decline in computer sales in nearly six years.

But netbooks, the smaller, lighter and cheaper laptops that are quickly gaining market share, are the proverbial fly in Apple's ointment, said Carton. Almost one-fourth of the people who said they planned to buy a laptop added that the machine would be a netbook; the 23% who said last month they planned to buy one in the next 90 days was up from February's 18% and January's 14%, a noteworthy surge.

Apple doesn't have a product in the under-US$500 range that traditionally defines the netbook category -- its cheapest laptop is the $999 last-generation MacBook. And although rumors continue to swirl about Apple rolling out something to compete in the category this year, nothing has been announced.

"There are some contradictory trends here [for Apple]," acknowledged Carton, referring to the upside of a better outlook for laptops in general but the downside of encroaching netbooks. "Sometimes the world is filled with many shades of gray."

Mike Abramsky, a Wall Street analyst with RBC Capital who joined the conference call, was blunter, though like Carton, he was optimistic about Apple. "The market is definitely shifting down in price, so Apple may need to introduce products to target that low end," said Abramsky. "That could show as lower pricing of existing products, or it could be a tablet, but it's not likely that Apple is going to shift away from its existing value proposition." That last phrase is Wall-Street speak for Apple's high prices, and resulting high margins, something rival Microsoft Corp. has used to its advantage in recent television advertising.

"How Apple wrestles with this growing netbook category will be important," Abramsky said. "But the Mac franchise isn't dead at all."

Like other analysts, Abramsky added that although Macs will remain a major revenue stream, he's pinning most of his hopes for Apple's growth on the iPhone and App Store business. "At June's WWDC [Worldwide Developers Conference], we think Apple will introduce a "pro" version of the iPhone, as well as a price cut on the existing iPhone," he said. "The pro won't be as revolutionary as the iPhone 3G last year, but it will continue the advantage that Apple has in the smartphone market."

Contrary to other rumors, Apple won't launch a smaller, cheaper version of the iPhone -- some have dubbed it an "iPhone Nano," referencing the small iPod -- said Abramsky. "We're not convinced that a nano iPhone will be introduced this year, but we know one's in the pipeline for next year," he said, adding that such a model would be perfect as pre-paid phone or as an inexpensive iPhone to sell in countries like China.

"What [ChangeWave's] data shows is that consumer sentiment is improving, and will allow Apple to sustain support for its value proposition," concluded Abramsky.

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Gregg Keizer

Gregg Keizer

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