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Apple Stores Helping to Maul Microsoft

Stocks in this article: AAPL MSFT AMZN

CUPERTINO, Calif. ( TheStreet) -- Apple (AAPL) stores, boosted by strong demand for iPads and Macs, are helping the tech giant intensify its assault on PC rival Microsoft (MSFT).

"The Apple stores continue to play a vital role in building the Apple brand -- indeed, they have become the face of Apple," explained Charlie Wolf, an analyst at Needham & Company, in a note released on Wednesday. "Through their array of post-sale services, the stores have become a magnet in attracting Windows users to the Mac platform."


Wolf explained that during the June quarter, Windows users purchased half of the 677,000 Macs sold in the stores. "This represented over 20% of the estimated number of Windows users who switched to a Mac during the quarter."

Windows users purchased half of the 606,000 Macs sold in the stores during Apple's prior quarter and Needham estimates that, since 2004, more than 18 million Windows users have switched to a Mac.

Apple stores have played a key role in this effort. "One of Apple's initial reasons for opening Apple stores was to spotlight the Mac, which had virtually no retail visibility," he said. "With an installed base that has more than doubled in the past five years, the Mac has gone mainstream with many consumer electronic chains now selling the Mac both here and abroad."

Total revenue from Apple stores grew 73% year-over-year to reach $2.58 billion during the company's recent third-quarter, thanks in no small part to the iPad.

Apple recently announced that it had sold more than 3 million iPads since launching the technology in early April, and the device has undoubtedly breathed new life into the ailing tablet market.

Analyst firm Forrester recently reported that iPad awareness is incredibly high. The firm found that only about 5% of U.S. online consumers said that they had never heard of the iPad, while three years after the launch of Amazon's (AMZN) Kindle, some 25% of U.S. online consumers had never heard of the online retailer's e-book reader.

"Apple store revenues in June were greater than Apple's total quarterly revenues from the second quarter of fiscal 1996 through the fourth quarter of fiscal 2004," explained Wolf, in his note, citing "phenomenal" iPad demand.

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