Analyst sees big market gains for Apple

Macworld UK - Apple Computer Inc. may secure more than 8% of the global PC market by 2016, according to the analysts at Needham & Co.

Analyst Charles Wolf has upped his target price on the company's stock from $90 to $115 per share, citing "stronger than anticipated growth in Mac shipments" in recent quarters.

Wolf added that the new valuation actually excludes any extra revenue and income that could be generated by "yet-to-be-announced products, such as an iPhone," suggesting Apple's fortunes next year could be even better than now seems likely.

The new valuation does take into account two successive quarters of strong Mac sales and tremendous sales of the iPod shuffle.

Wolf has consistently pointed to the success of the iPod and Apple's decision to enable the running of Windows on Intel Macs using Boot Camp as catalysts that make it likely more Windows users will switch to Mac hardware.

But even Wolf has been surprised at the speed with which the migration is taking place.

In a survey publicized in May, Wolf said: "Among Windows users who did not own an iPod, the mean switch rate increased from 3.6% when the Mac could not run Windows to 11.1% when it could. Among Windows users who owned iPods the increase was more dramatic -- from 7.6% to 20.2%."

But the analyst feels that his previous estimates for Windows users switching to a Mac may be incorrect. He had assumed that Windows users wouldn't switch to a Mac until a fully supported version of Boot Camp shipped, with Mac OS X 10.5 Leopard.

"In view of the increasing number of Windows users who are switching even before the Mac can run Windows, this was an unrealistic assumption," he observed.

The result of the pro-Apple tidal wave will be to transform the company's place among PC manufacturers, the analyst suggested.

"In measuring the impact on the switch rate stemming from the Mac's ability to run Windows, we assumed that the only Windows users who switched were those in the U.S. and European home markets. These markets represent about 20% of the worldwide PC market. Our forecast has Apple's share of these two markets increasing dramatically -- from 9% in 2006 to over 40% in 2016. A significant portion of the increase results from our plausible assumption that once they switch, a high percentage of Windows users will stay with the Mac platform when they subsequently upgrade," he said.

And Boot Camp will likely tempt switchers across global markets, particularly in education and the small and midsize business sectors, he said.

"A more accurate measure then of the iPod halo and Windows-on-Mac phenomena is Apple's share of the worldwide PC market. This increases more realistically from 3.5% in 2007 to 8.3% in 2016, the last year in our forecast," he said.

Wolf's model predicts a June release for Mac OS X 10.5, and ignores for the moment the potential revenue from the release of the iPhone, the video iPod and the upcoming iTV.

The analyst predicted an iPhone "as early as" January 2007; a "true" video iPod in the "first half of 2007"; and the same six-month range for the eventual debut of the iTV. All these products could significantly increase Wolf's valuation on the stock.