Consumer Spending Slowdown Catches Apple

Rockville, Maryland, October 2, 2008 – Apple (AAPL) suddenly finds itself in a vulnerable position, just as the latest ChangeWave consumer survey shows another big leg downward for the beleaguered U.S. consumer.

ChangeWave’s September 16-26 survey of 4,262 consumers focused on PC spending – and it shows Apple’s real problem isn’t Mac sales for the previous 90 days (sales are looking good), it’s their outlook for Macs going forward.

Past 90 Days – A Good Quarter For Mac Sales - Among respondents who bought a computer over the past 90 days, 23% say they bought an Apple laptop and 17% a desktop – down 1-pt and 2-pts respectively from the August ChangeWave survey.

But while the latest Mac results are down slightly, they’re still quite close to the highs reached in both our July and August surveys – when the Mac halo effect caused by the release of the 3G iPhone was still in effect.

When you look at the July, August and September surveys in combination, the results say that Apple should meet its Mac sales numbers for the July 1 – September 30th quarter.

However, the outlook for the next 90 days shows a much, much tougher environment going forward.

Next 90 Days – It’s All About Visibility Why the concern about Apple’s outlook? Among respondents who plan to buy a PC over the next 90 days, just 29% say they’ll purchase an Apple laptop – down a full 5-pts since August. Another 26% say they plan to buy a desktop, a 4-pt decline.

These are the weakest looking numbers we’ve seen all year for Apple in terms of future buying – and the biggest drop in visibility in 2 ½ years.

Compounding the matter, overall Consumer Electronics spending for the next 90 days is registering yet another big slowdown – just as the crucial holiday season gets underway.

Only 14% say they’ll spend more on consumer electronics over the next 90 days compared to 40% who say less – a net 7-pt decline just since August, and the weakest 90-day outlook for electronics spending we’ve recorded in a ChangeWave survey.

Most importantly, overall planned PC buying among consumers remains quite weak. Just 8% of respondents say they’ll buy laptops in the next 90 days and 6% desktops – significantly below our findings from a year ago.

Bittersweet Findings Despite an already severe 15 month contraction, our latest survey shows U.S. consumer spending has suddenly taken a big turn for the worse. Better than half of U.S. respondents (52%) now say they’ll spend less money over the next 90 days. And spending on consumer electronics looks set to take the biggest hit.

Within this environment, our July, August and September survey results measuring the past 90 days show that Apple should meet its Mac sales numbers for the quarter.

But our September survey results for the next 90 days show Apple has a considerable visibility problem – which represents the real Achilles heel for Apple.

Bottom line, while Apple’s guidance is normally conservative, we expect it to be much more so on October 21st when it provides its Mac sales projections for the holiday season.

Long term, the company still has a tremendous outlook. One example, our latest consumer cell phone survey shows the smart phone market thriving, and among respondents planning to buy a new smart phone in the next 90 days, more than a third (34%) say they’ll get an Apple iPhone – the highest level of smart phone demand in the industry.

Based on our data, we fully expect Apple’s iPhone numbers will beat consensus estimates on October 21st. However, Mac sales projections going forward are the number one issue for the company, and that’s where our survey results show Apple is vulnerable – caught in the fierce headwinds of the accelerating economic downturn.

Source: ChangeWave Research

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