Firm expects Apple to grab 4% US market share

The research and investment firm believes Tiger sales could top $100 million in its first quarter of release, consistent with an earlier analyst report that suggested first quarter Tiger sales could possibly double that of Panther, which grossed approximately $60 during its first quarter on the market in 2003.

"The Mac installed based in 2003 was approximately 10 million systems compared to 14 million units today. During the first quarter of its release, 4.7% of Mac users upgraded to Panther," said analyst Steve Milunovich. "If we assume the same conversion rate and an installed base that is 40% larger, Tiger could pull in about $84 million during its first quarter of release." If this conversion rate increases by 9 basis points, Tiger could pull in about $100 million during its first quarter, he added.

According to research by the Gartner Group, Mac OS X will run on 2.4% of the worldwide PC installed base in 2005. But Merrill Lynch expects Apple's OS to run over ten million computers in the U.S. during the same time period, grabbing over 4% market share.

In a research note released to clients today, the firm noted that Apple's PC unit share declined on average by 3 basis points one quarter after the release of its last three Mac OS updates (Puma, Jaguar, and Panther). "We believe the halo effect from the iPod craze will reverse this negative trend," Milunovich wrote in the note. He expects Apple to have about 2.5% of the worldwide market by the end of 2005, up from 2.1% in first calendar quarter of the year.

Merrill Lynch also reiterated expectations of imminent updates to Apple's iMac and eMac product lines. Meanwhile, the firm said the Mac mini could allow Apple’s desktop share to catch up to its notebook share. Currently Apple has 3.4% of the notebook market but just 1.7% of desktops.

Merrill Lynch reiterated a "Buy" rating on Apple with a price objective of $51 per share.