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The trouble with halos

The Mac grew at 28% while the overall PC market contracted at 3%. The Mac has outperformed the PC market overall for 20 consecutive quarters.

Prices increased sequentially and year-to-year.

I’ve mentioned the increasing shift of Mac mix to portables as a possible reason for the growth of the business. The Mac was one of the first to move to a portable form factor and has been pushing portability over performance for many years.

The following chart shows the relationship between growth and portable mix:

The trouble is that mix is not enough to explain the increasing gap with the rest of the PC industry. Windows PCs have also embraced portability and have even run down the path of over-serving portability with the netbook.

Clearly something else must also be at work. This was even noted by Apple’s COO Tim Cook in the last conference call in response to question on the effect of iPhone growth on the Mac:

[iPhone] clearly seems to be creating a halo effect for the Mac. And I think that’s one reason we see the growth that we are seeing on the Mac. It’s amazing when you see the 28% year-over-year versus the worldwide market in PCs contracting by 3 points. It’s an astonishing delta.

The delta has been there for a while but it’s widening and it’s persistent.

I’ve never been comfortable with the halo effect. Not because it’s not happening but because we don’t have a way to measure it. I’ve never seen reliable data that establishes a causal link. Lots of anecdote but little proof.

The other problem with halo is that it implies illusion and hence impermanence. The halo effect is a cognitive bias which can mislead. An example would be judging a good-looking person as more intelligent.

This effect is often exploited in marketing. It’s quite common in the automotive industry where halo vehicles (e.g. Ford GT 40 or Dodge Viper) are created which promote sales for the entire brand even though they may lose money. These efforts often fail or have temporary benefits at best.

When it’s deliberate and an attempt to prop up something unworthy it seems deceptive, dangerous and temporary (buyers may be disappointed when they buy a Ford or Dodge and realize that they are not supercars and a reverse halo effect can emerge.)

A halo effect should be used to boost a product that is under-rated not badly rated. This is when the effect creates benefit over a long period of time like the five years over which the Mac has over-performed.

  • http://noisetech-software.com/Perspectives.html Steven Noyes

    Horace,

    “move to a portable from factor”

    Should be:

    “move to a portable form factor”

  • http://twitter.com/warrengallagher @warrengallagher

    I think the move to Intel processors and Bootcamp made a huge difference. Folks who were interested in the platform had a way of removing the risk of moving to a platform that was not primarily Windows.
    That combined with the continued rise of the web means that folks can do more and more without native applications. I don't know how to quantify these things, but I certainly think that removing that risk of moving away from Windows is significant.

    • davel

      I agree. I think this was a minor item but huge. You can purchase the Mac you may want and get the functionality and the comfort of having Office. This was derivative of the Intel price/performance gains after IBM and Motorola had their years long pissing contest and indifference to the PowerPC chip that was Apple's core.

    • http://twitter.com/fictionalui @fictionalui

      Absolutely.
      Reduced platform switching risk, and assurance of performance parity with PCs.

      I can assure you that, anecdotally, that counted a lot in my circle of friends.

      It's difficult to quantify the impact, relative to the other factors at play (not only halo effect of iDevices but also the build-up of all the good technical and marketing work executed by Apple since Jobs' return), but as a single factor it *has* to be mentioned.

      Especially since "the Mac has outperformed the PC market overall for 20 consecutive quarters" – well Macs are on Intel since exactly 20 quarters.

  • mortjac

    The Halo-effect may consist partly of:
    – better synchronization with iOS devices
    – customer getting used to touch easy will want the the market best touch-pad
    – brilliant apps from Apple on iOS as iMovie, Garageband, iWork also available on OS X

  • http://steveweller.com Steve Weller

    Two factors are at play: casual contact with Apple products (iPhone, friends who suddenly have Macs), and the ability to play in the Apple stores without any pressure to buy. These act together to allow people to gradually rid themselves of a decade of misinformation and bad marketing from competitors and the press. Over time the lies simply become overwhelmed by evidence.

    As late as 2006 I was having to convince educated, technical people that yes, Apple computers really do read and write the same file types as the rest of the world, can be networked with Ethernet and TCP/IP just like everyone else, and do run Office, talk to mail servers, etc.

  • John

    I think the halo effect is bringing people in contact with Apple products where they wouldnt have looked at one otherwise. This is partly just proximity as in you go to the Apple store for an iPod/iPhone/iPad and spend time testing the laptops. Part of it is legitimacy. The quality of the iOS products gets you past the negative impressions people get from the MS centric world.

  • sfmitch

    I think there is a big difference between your car manufacturer example – create a (super) high-end, but small volume, vehicle to get people excited about the brand who are then more likely to buy into the mid-range but high-volume option – and Apple's iPod, and now iPhone -> Mac situation.

    The iPod sells significantly higher volume than the Mac and is definitely a lower-end product and thus I would suggest that a better example in the car industry is the Civic or Corolla. Honda and Toyota delighted their customers at the low end who then went on to buy higher-end Hondas, Acuras, Toyotas and Lexus.

    Before the iPod and iPhone, Apple had a terribly difficult time convincing people to switch from Windows PCs to the Mac. Most people wouldn't even consider a Mac – the unfamiliarity with Apple and the costs (money and time) made switching platforms prohibitive.

    As consumers started using Apple products (iPod and then iPhone and iPad) and were delighted, they were much more open to considering switching from from a Windows PC to a Mac. If you like this (iPod / iPhone), then you'll like this, too (Mac). Satisfaction with the Mac helps continue the cycle.

    In my opinion, the Mac will continue to outgrow the PC market as a whole. It's a snowball growing bigger and bigger.

    • http://twitter.com/mariomui @mariomui

      eh. I don't know about that. the snowball effect may not be able to offset the lock in effect. Microsoft apps. A lot of people were reared on Microsoft Office. All the schools have it, etc. It's a really a hard hill to climb, unlike mobile apps.

      • Hamranhansenhansen

        Microsoft Office is a Mac app since the 1980's. It's not holding anyone on Windows. What holds Microsoft Office users on Windows is they think $500 is already expensive for a typewriter. They get very little out of Office and Windows, so they don't want to pay more. Office work is not a high-end task anymore. I think iPad gets these users going forward.

  • Jacob W

    I wouldn’t say it’s just the iPhone. I think this “halo effect” all started with the iPod. 

    It would be nice to compare it to Sony’s Walkman and maybe how that changed people’s perceptions of Sony or earned their goodwill. 

    Forgetting Smartphones and Tablets, how many people if they break or lose their iPod, will go to their back up iPod or go out and buy a new one? And if they have Smartphones, they could have Blackberries or Androids, but they still have their iPod or iPod Touch. And they might not get an iPhone, but that doesn’t mean they won’t get a Mac. 

    Looking at the teen market, or people who were in the teen market in the last decade. That iPod good will, and it’s like a need or an addiction, has turned these new college students and young adults into looking at Apple in a good light. And when THEY buy their first computer, they are either going to be cheap out of necessity, or go longterm with Apple. And this doesn’t even count into the effect it that it has on their parents. 

    And @Steve Weller, good post. When you can just play with something at the Apple store, it gets you thinking about it. Everyone likes to play. 

    • Eric D.

      Agree about the wave of upcoming youth who only know Apple as the maker of cool devices. They may not be primary purchasers, but they are the ones asking their parents to get them a MacBook for college.

      Now when the education establishment eventually begins to take advantage of the massive economies that are possible when you replace textbooks, other reading materials, workbooks, tests and so on with a simple iPad (which will probably be discounted wholesale to around $300), then look out.

  • Eric

    I went away from the site to listen to the 5 by 5 interview and came back to a new posting. It clearly reinforced your points that we learn from one another, facts are important and there is sheer enjoyment in figuring things out.

    There is more to unpack from the three sentences on the halo effect than in many full pieces elsewhere.

    "I’ve never been comfortable with the halo effect. Not because it’s not happening but because we don’t have a way to measure it. I’ve never seen reliable data that establishes a causal link."

    Thanks for a great site, informative posts and sharing a clarity of thinking that benefits us all.

  • davel

    As Apple affirms in their periodic statements, the Apple store is key to growth. It allows Apple to present its offerings in a manner that allows them to shine.

    In the past when a computer store had an Apple display the salesperson invariably steered the customer to an IBM clone. The iPod and the iPhone increased awareness and the Apple store allowed an interactive question/answer session that sealed the deal.

  • Grant Klassen

    The "Halo Effect" is encapsulates all of the levels of marketing:
    Awareness – when a related Apple product is popular, awareness builds by the propagation of the Apple name
    Interest – when so many people have Apple products, interest is piqued
    Desire – when people have pleasure and satisfaction with Apple products, desire is kindled
    Action – when the Apple stores (physical and online) are attractive and pleasant, action is taken

    The complexity of the "Halo effect" is that all of these are co-mingled and it's hard to separate out all the effects. But it's effect can't be denied.

    peace,
    Grant

    • Ziad Fazel

      While I also agree with John and Steve Weller's comments earlier, Grant Klassen's comment reflects my thinking best.

      I think "Halo effect" is an unfortunate misuse of the term, because the term is used to misjudge or impute other positive traits of something based on one trait, eg attractive people are also smart and friendly.

      http://en.wikipedia.org/wiki/Halo_effect

      Sales of Macs because of iPods and later iPhones would better be characterized as Brand Reputation, or Successful Trial.

      A customer makes a low risk purchase of an iPod – cheaper than a PC, white earbuds on happy people everywhere, zero-maintenance OS, synchs to several services and stored media on Windows or Mac, has a well-managed ecosystem of content and apps coming through iTunes.

      Now with good personal experience with Apple, they meet people who own Macs, or check out the Macs in an Apple Store or authorized retailer. They see the investment they already made with iTunes, and synching contacts, photos, etc would remain if they switched from Windows to Mac, or added a Mac. No Vista, or confusing, overpriced Windows 7 tiers. No Windows Media/Zune incompatibility fiasco. (From Apple's perspective, the commercial relationship already established through iTunes is preserved when the Mac is purchased).

      Then they make the more risky purchase of a Mac – higher priced computer, new OS, new apps, small market share – based on the brand value and proven good experience with their iOS device. Same peripherals work. MS Office is there if they want to stick with that. Boot Camp and VMs are there if they still want Windows around, if only as a palliative. 90 days of free phone support is included with the purchase, and AppleCare raises that to 3 years (if the retailer does not steer them to an inferior program).

      The Mac App Store makes Macs as easy to enhance as an iOS device, with the security of Apple curating the store, and the reviews from other customers. For Windows Switchers, or less-technical Mac Users, no more searching through VersionTracker/CNET/Sourceforge for some app they heard about.

      You could consider the iPod Shuffle or Nano as the "portal drug" getting people into the iTunes Store and Apple ecosystem, and they are then happily hooked on Mac laptops with 50% margin yet better productivity and TCO than a discount Windows desktop or netbook.

      • Eric D.

        I agree with the dynamic you describe. And I would add that the next generation of kids will probably be more comfortable with an iPad than with a laptop. At which point Apple has both the quality and price advantages, never mind the brand loyalty. What a juggernaut.

      • AC88

        I agree completely with Ziad. One might say that it's less of a halo and more of a rainbow or a cascading waterfall (if a rainbow isn't a clumsy enough metaphor)–consider the arc of the entry level prices of
        the iPod:
        $59-$149-$229-$249
        the iPhone
        $49-$199-$299-$659 ($CDN, no contract)
        the iPad
        $499-$629
        and the Mac
        $699-$999-$1,199-$2,499

        And we find that Apple provides a painless, low risk entry point with the iPod and iPhone that serves to provide a migration path to the iPad and Mac products. The experience of a generation of folks raised on the iPod has made the iPhone low-risk, high-desire choice. The iPhone experience in turn, leads a lot of users to the Mac.
        The stores are important as well. Initially they were built to provide 90% of computer users (Windows) the opportunity to walk 20 ft in a mall rather than drive 20 minutes or more to a Mac specialty shop to painlessly and effortlessly try a Mac in a no-risk environment. Today, they serve a much broader purpose, but at heart they are experience centers, without cash registers in sight, where products are bought more than they're sold.

  • iphoned

    Isn't the expansion of the Apple retail stores is the most likely explanation for the Mac growth?

    • asymco

      No because it's growing even faster outside the US where stores are very, very rare.

  • Rob Scott

    I think the halo effect can be expressed as the iPhone/ iPad reach in units * the satisfaction retio for each product +/- a constant.

  • John

    It's essentially an unanswerable question. Apple Stores, iDevice halo, sexy hardware, Vista aftershocks, Windows security woes, iLife, Intel processors, race to the bottom price/quality among the competition…amidst this perfect storm of positive factors, how can we control for any individual variable?

  • Omar

    Great article Horace, a reputable company like Apple that produces innovative high quality break through products have a very high halo Mac adoption effect. Again this is reinforced by the quality of their mobile products and compelling software that powers these device.

  • berult

    Who's to say a good-looking person is not more intelligent? The one who does the bidding I'd say… The hollow effect: going for shell coordinates on a wager of seeped through symmetry. 

    It might pay off, as is the case with Apple whereby form espouses substance in a duopolistic metaphor for assisted life enhancement. But then… it might not, as there is hardly ever any demand for fulfilled drawn-up boundaries.

    From ballistic formalism to holistic pragmatism, the Apple journey through quick-buck fallacy country into soul-fitted architectural mainstay. Who's to say an astute person is not good-looking? The one who's bided upon, for he or she has the lasting word on it… 

    • davel

      Can I have an English translation please? :)

  • WaltFrench

    Lots of good ideas here but alas I can’t see how you’d run a causality test on any of em. So I’m free to add another idea that might be testable tho I have no evidence other than my own experience.

    The sharp decline in overall PC prices, Apple’s decision to offer products closely in line with others’ pricing, Apple’s emphasis on quality (I just this week read a finance blogger crow about free just-out-of-warranty service with a smile) and yes, the iPod phenomenon of good value Apple products, all cooperated to make the “it just works” line both believable and not very expensive.

    With a low cost to go from horror-story Dell or virus-infested XP up to the Lexus, why not?

    Certainly the shift that more PCs are personal purchases rather than low-bid corporate contracts emphasize the self-(no need to)-support, identification and iPlay apps reasons, too. (This could be semi-testable, too.)

    • davel

      I don't have any personal experience with the above, but what you say rings true.

      Many non-technical people can't be bothered or get frustrated with maintenance. My understanding from friends who have a mac is that it just works. Other friends who have pc's say the same, but I know they do things to make them just work because they understand them.

      I know my iPad just works. When it doesn't I have to reboot. But I do not have to ( nor can I ) do anything else to fix it.

      Apple's products have a calmness to them that you only appreciate after using them for some time.

      Introducing yourself to Apple via the iPod or the iPhone changes minds.

  • http://aaplmodel.blogspot.com deagol

    Horace, I think there's many ways to measure the halo effect: relate some measure of 1) present Mac/PC market share gains with 2) historical non-Mac halo devices unit (or perhaps installed base) growth. For example:

    1) Suppose Mac gained market share from 4% to 4.5%, or about 1.5m switchers over one year.

    2) Suppose iDevice units grew by 55m over last 2 years. Many of these are already Mac based, but assume for simplicity 90% are potential switchers (it's probably less than that) leaving 50m. Further, only a fraction of these needed to replace their aging PC over the last year, say 1/5th or 10m if on a 5-year replacement cycle.

    So of the 10m new iDevice users in the last 2 years who remain potential switchers and are in need of a replacement PC, 1.5m went Mac, or 15%. Contrast this with the overall 4.5% market share and you've measured a halo multiple bigger than 3x (233% more likely to switch if bought an iDevice in the prior year).

    These are all hypothetical figures to illustrate the concept. Other variations could be modeled, like what happens with the iPod-toting kid who's buying her first PC and picks a Mac. Is she counted as a switcher?

    • davel

      I am not convinced. I believe the Halo effect is a result of emotional projections. An emotional state of mind is historically hard to quantify objectively.

      Part of the problem with economic models is that they have an emotional component to them which directly affects the multiple applied in their math models. That is why confidence in the principals of an economy is so important to understanding the health of a given economy.

      This is why I think the halo effect can only be measured anecdotally.

  • hiren

    Hi Horace,

    The term Halo effect seems to quickly yet imprecisely aggregate several factors that improve Mac Sales. More over I'd bet you probably wouldn't be able to isolate any single factor that would lift sales more than a two or three percent. Here are some broad categories:

    1) Suitable Alternative: iOS popularity provides increased awareness for a suitable alternative. — Foot Traffic, Website Eyeballs, Net Promoters
    2) Compatibility: Mobile devices play a more important part in our life and consumers are looking for devices that conform to them instead of the other way around. For some people this could be easier synchronization and content management platform.
    3) Increased Functionality: Combining the devices provides greater overall functionality while making things simpler.
    4) Inertia: The more Apple devices you purchase the more you are likely to buy in the future.

  • Childermass

    The 'halo effect' used to be called 'word of mouth' and there is nothing mysterious about it.

    What seems to be happening here is that we just cannot get our heads round 'word of mouth' being so effective with a huge technology company. It is what happens with pop groups or Tamagotchi toys.

    Isn't Apple teaching us that tech specs are nothing to do with it? Their major accomplishment has been to remove 'technology'. All their kit is being bought by folk in general, like my daughters, who don't care about the specs so long as it 'just works'. Naturally 'just works' necessitates some dazzlingly clever technology but we, the consumers, don't use that to judge. Once they have their MBAs they tell everyone they know how cool they are.

    Word of mouth is the most effective form of marketing. Nothing is more convincing than a personal recommendation from someone you trust. As Apple branded items get bought and used we tell our friends, they in turn buy, love and proselytise. It doesn't matter whether it is an iPod or an iMac. It is all 'Apple'.

    The purchase-redundant cycle takes a while for portable computers and longer still for desk tops. As we need new, or think we do, we now buy the name we trust – Apple. This isn't true of any other brand. The world NEVER buys a 'Dell' – they don't even know what one is.

    This is why Apple users come across as zealots! Their satisfaction and delight in their purchase has a name: Apple. This sense of belonging is fed by the hobby store experience of Apple shops. You go to fondle and talk about all this cool stuff, and if you come away without a purchase you feel disappointed.

    Word of mouth is the marketers' dream, because it 'just works

  • kevin

    Besides Apple's early emphasis on laptops and portability, I think the primary tipping point was Apple's switch to Intel CPU plus Boot Camp across all its Mac products in 2006. The switch from PowerPC made it very low-risk for Windows people to rationalize purchasing a Mac, because they could go back to using Windows on a Mac if they needed to. Of course, the PC vs Mac ads with Justin Long and John Hodgman also started in May 2006 so that could've been very significant as well.

    From mid-2001 to 2006, under OS X, Apple was slowly growing sales from around 750k up to about 1100-1200k a quarter. After the switch to Intel, Apple surged up to 1500-1600k and again up to 2100k+ units a quarter by mid-2007 (now at 4000k+ units sold a quarter). Though largely due to portables, Apple's desktops also have grown achieved 50%+ yoy in many quarters.

  • unhinged

    I think we can safely say that Apple _is_ growing this market – look at the decline in PC sales (down 3%) versus the 28% growth in Mac sales.

  • Hamranhansenhansen

    I think this is primarily about low-end versus high-end.

    After the Intel switch, the Mac stopped being an exotic high-end computer and became *the* high-end Intel PC. Since the Intel switch, if you spend more than $1000 on a PC, it is almost always a Mac. Other $1000 PC's had to go head-to-head with the Mac and they lost badly. They were running XP from 2001, it was no contest. A Windows PC is a $500 item since then. Windows is all low-end.

    One reason Vista failed was it was made to run on high-end PC's, to be an Intel-native answer to Mac OS X, but by the time it shipped, the Windows PC market had been pushed down into the $500 range by the Intel Mac, and a $500 PC in 2007 ran Vista very badly. All the high-end Intel CPU's that were fated to run Vista were already running Mac OS X. The oxygen has been taken out of the Windows PC market since then. HP and Dell et al used to sell high-end boxes that made up for all the low-end. Now it is just sheer tonnage of low-end. We even have Windows Starter to reduce the price of Windows on these low-cost boxes.

    So it is not Mac versus Windows, but rather high-end versus low-end. High-end PC's are more and more in demand as our computing needs increase, but low-end PC's are less and less in demand as their features have been commoditized by smartphones and the iPad. We need fewer Web/Email workstations ($500 Windows PC's) now that we have smartphones and iPad, but we need even more video editing workstations, more photography workstations, more graphics workstations, more programming workstations, more scientific workstations ($1000 Macs).

    A good example is Google. They stopped deploying low-end PC's (Windows) because of security concerns, and started deploying even more high-end PC's (Macs). It wasn't a decision about computer design, user interface, or software platforms, it was just pure low-end versus high-end. They needed better security than low-end PC's could offer.

    Also I've seen offices go to all Macs solely to reduce I-T support costs, to reduce help desk calls from stuck users, and reduce virus-recovery to nil, and improve security, and improve the uniformity of their computer fleet so that it is easier to manage. I've seen some offices where they are 100% Mac but 20% of the Macs run Windows, and again, that reduced support costs because of better driver support and more uniform hardware. They are 80% Mac OS and 20% Windows but 100% high-end PC's. There was no other PC vendor who could sell them a uniform fleet of high-security, low-maintenance PC's.

    So Mac growth is just high-end PC growth. Windows shrinking is just low-end PC shrinking.

  • http://twitter.com/gassee @gassee

    I agree "halo effect" is hard to prove or disprove. Therefore it's non-scientific. Neil Postman call this Story Telling as opposed to Science.
    This said… For me the halo effect started with the iPod. Before, Apple was a company that "should have succeeded", or one that "might succeed". The iPod was a success without a doubt and thus put on new coat of paint on the logo. With help from the Apple Stores. (At the time, I thought both the iPod and the Apple Store were bad ideas… Better sticking to prediciting the past.)
    Then, as several commenters noted already: the switch to Intel + Bootcamp (and Parallels/VMWare).
    Soon thereafter, Microsoft obliged with Vista.
    This led to the high-end/low-end market divide noted by Hamranhansenhansen.
    Then the JesusPhone. Here, we have a number of new Apple customers effect. The new iPhone user is bound to think it might work _even better_ with a Mac.
    And the iPad.
    Lastly, yes, Word Of Mouth still beats marketing budgets.
    Or, put another way, marketing money encourages WoM — if it's positive.
    Great to read Horace and his commenters! JLG

  • Sander van der Wal

    What about looks, good looks in particular? A computer in the living room needs to look good, next to the other furniture. A portable needs to look good too.

    What about showing off your affluence? Works very well with other things that are expensive, like Rolexes and BMW's. Apple stuff is known to be good quality, very usable and rather expensive. So you can display it to show that you are rich enough to afford the best.

  • Tom

    I’d explain the Mac surge with a number of things that happened since 2003 when Mac share bottomed out: OS X widely regarded as the better OS (since 2004), iLife and Pro software, Intel switch, notebook shift, iPod halo, iPhone halo. Together, these started to overcome the Windows stigma: The common notion that Apple is a dying company and the Mac a failed product that you should not touch.

    Nevertheless, this stigma is still visible today, with the “common sense” being that Apple’s integrated business model is inherently inferior.

    It’s interesting how surviving the Windows monopoly made Apple the most fiercely competitive company in the world yet most observers are still just waiting for the bubble to pop again.

  • http://twitter.com/Accent_Sweden @Accent_Sweden

    I agree that while convincing others of their mistakes may seem admirable, it is rarely productive on a large scale. I live in Sweden now and I once sat with a group of immigrant small business owners (including myself) as they complained why Swedes don't understand why they should be buying their products and some argued that we have to teach the market to like our products. I quickly realized it was an exercise in futility. You have to have very deep pockets to do that and even then, most companies fail. Just ask Microsoft.

    Some may say Apple did this with the iPad but in fact, the market gobbled it up because it was exactly what it wanted, not that people had to be convinced to buy it. It was the pundits and competitors who didn't believe the market wanted iPads, not buyers.

    While many Apple shareholders may wish Wall Street would treat Apple like other companies when valuing it, the real issue isn't about convincing Wall Street to change it's behavior, but rather, understanding why the situation is the way it is and, for some of us, then finding strategies to benefit from this, whether in our own trading strategies or holding strategies. Horace is doing a great job at helping us think outside the box and understanding Apple's trading dynamic based on actual causations rather than unquestioned, commonly accepted explanations. There's no single answer to this, just deeper understanding from a trail of indications and, as Horace has shown us, innovative ways of presenting insights and data that help us both see the most important facts and connections and leave behind popular, yet non-productive ways of interpreting Apple and its place in the market.

  • gctwnl

    We might not need a brand image based 'halo effect' to explain the delta at all. Because what we might just have is that more and more consumers experience that the Mac experience for them beats the WinPC experience and they tell each other. The 'halo effect' of the brand with the Ford or Dodge example is just that: brand image. But that works only because bottom line the products of the car manufacturers are very comparable. The Mac experience differs more from the WinPC experience than the Ford experience differs from the GM experience. More than just brand effects are at play.

    What might happen here is that Apple has a pretty good strategy to get people in contact with their differentiated product (stores, commercials – note how these for a long time stressed 'different', including with the I'm a Mac series).

  • DDD

    The halo effect is real, it's just hard to quantify. But anecdotal evidence is everywhere. My neighbours were PC people until they picked up an iPad. Now, they are proud owners of a MacBook and an iPod as well. And like many converts, they are also now Mac zealots. They can't believe how easy things are. But there is no question that in their case, the Apple Store made a big difference to lowering the barrier.

    Finally, there is also a negative Halo effect from all the horror stories that PC users have experienced over the years. Also hard to quantify, but definitely a factor.

  • Michael Held

    The 'halo effect' is by definition a bias. So maybe to start measuring 'halo' we just need to establish what creates 'bias'? In Apples case there are probably various parameters influencing over the last 10 years:
    – Awareness/Visibility, feel and touch = number of Apple store, premium resellers, resellers … per country
    – Awareness/Conversation = articles about Apple and its products, magazines/websites dedicated to Apple, influencers/opinion leaders covering Apple, number of expert Analysts, tweets, facebook mentions … 'there is no such thing as bad press'
    – Attribution/Successes = Number of Market Category leaders (incl. software)? Number of Industries disrupted with positive effects for consumers?

    Interesting but difficult to measure:
    – Barriers of entry, cognitive = Move to Intel seen as 'just like a PC', counter argument might be BluRay? But maybe BluRay is just a missing feature … iTunes and Safari for Windows … webkit (expert influence) …

  • chandra

    Not every business dynamic can be measured.
    Halo effect is indeed impermanent. Like Goodwill, the popular intangible Balance Sheet asset of the past, it can turn around and bite you if you anger your constituency.
    While it may not be measurable in terms of indexing it, emotion, the psychological shift in Apple's favour is simple to understand.
    And, again, while you cannot put a yardstick to any of the emotion factors, you can certainly identify them and also rank them into some kind of order of importance as contributors to AAPL's rise, and rise.
    Let's start the ball rolling with a few easy exemplars:
    ground-breaking
    the repetitive global syndrome of buyer's joy
    the 'it just works so well' factor
    Tim Cook's 'joy and delight' factor
    exemplar of great, functional hardware design
    'beautiful' products
    tick-tock cycles that people can relate to
    the single exemplar of software that is easy to use
    Singular QSVI presence in its markets (Quality, Service, Value, Integrity)
    Residual values (à la Mercedes Benz or Lexus)
    Backstory – enfant terrible maverick of yesteryear finds religion and …. followers
    Stores everywhere – proactive helpfulness, no pressure, genius, free lessons, approachability and visibility
    Easy to see and experience the user-centricity
    iTunes University – why isn't everyone talking about this free gem?
    Democratisation of choice in music, apps, books etc leads to truly fair pricing with no forced bundling
    Respect for the user's privacy – oh yes, despite this storm in a teacup about location data.

    It would be get more thoughts on this. I'm a shareholder and a customer since 1976. I could go on with this list for a hundred more factors why the world is swinging towards Apple, but three words in a simple equation sum it up for me:

    Admiration + Trust = Desirability

  • chandra

    E&OE! Sorry.
    Last para should begin:

    It would be good to get more thoughts on this.

  • Jon

    I don't view the halo effect as something illusory. When you buy an iPhone or iPad, the total user experience is just a lot better if you own a Mac to connect with it. The integration with Windows PCs just isn't as good. You get the most out of Apple products when you embrace the entire ecosystem – Mac, iTunes, iOS, etc.

    Before, this was a big hurdle – but iPhone and iPad are devices compelling enough to get people over it. After you have one of those devices and have to deal with the problems of connecting it to your regular PC, you begin to think how much easier it would be otherwise. I guess you could say that Apple's inability to integrate with other systems well is what drives sales of its own products after they gain an initial foothold in the consumer's life.

    • John

      Interesting point. It mirrors Microsoft's success in the enterprise to some degree: once you choose one piece of Microsoft technology, it's very easy to buy into the logic that your environment would be so much more powerful if you'd invest in more of their stack.

      Because it sure doesn't play all that well with non-Microsoft tech.

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