For Apple, that means mulling new strategies to go beyond its hardcore fan base in the hopes of adding just a few valuable percentage points to its single-digit U.S. market share.
"They aren't going to double their market share in MP3 players -- they already own 70% of that market," says Mark Stahlman, a technology strategist at Gartner Invest. "The only opportunity I can think of for Apple to substantially expand their business would be to double or triple their market share of Macintoshes."
The momentum from its latest quarter suggests the company is poised to do just that. Apple
wowed the Street with its fourth-quarter Macintosh sales, which grew 30% to 1.6 million units over the comparable period last year.
Also, the latest Gartner PC report shows the company growing its third-quarter U.S. market share from to 6.1% from 4.6% a year earlier.
"They were more of a niche player in the past," says Richard Stice of Standard & Poor's. "Now they're becoming more broad-based."
One reason Apple is gaining share in the PC market is because of the so-called halo effect, Stice says, which had predicted that satisfied iPod users would migrate toward Macs. For the past several quarters, more than 50% of Apple store customers were new to the Mac platform, management has said.
Stice says another contributing factor to Apple gains is missteps from
, whose PC shipments in the U.S. declined 7.1% year over year, according to Gartner numbers.
And even though Apple still holds a relatively small market share overall, any inroads can have a dramatic effect on the company's bottom line. In its latest fourth quarter, for example, Apple's profit rose 27% to $546 million, even as the computer portion of total company revenue moved only 2 percentage points (to 45.8%).
Although there have been various attempts in the company's history to grow its Mac business, Stahlman says now is a particularly opportune time: Windows can run on Apple hardware; Apple has a powerful semiconductor company,
, supporting them; and businesses are going through a significant evaluation and upgrade process with the launch of
Vista operating system.
"This is the first time in the history of Apple as a company that they have a real shot at dramatically expanding Macintosh market share," Stahlman says.
Stahlman's suggestion, which created buzz last week after publication of his Gartner note, calls for Apple to license the Mac to Dell to become a substantial rival to Microsoft. With Dell and Intel already close partners, the trio makes a lot of sense. That would be the quickest way to beef up distribution, he says.
While that specific strategy has found its doubters -- some observers have wondered if Dell's now-questionable customer service would indeed entice new customers -- the idea that Apple consider different routes to a broader consumer base seems sound.
And Apple has begun taking some steps -- albeit small ones -- to reach out to a more mainstream audience. The company is dipping a toe into one of the most popular consumer-electronics stores,
, which has 794 locations in the U.S. and Canada.
Best Buy started selling Macs in seven stores earlier this year and now is expanding the pilot program to 50 stores, featuring a selection of Mac desktops and notebooks as well as software and accessories, says Apple spokeswoman Kristin Huguet. "We will continue to evaluate how the program is doing over the next several months."
Huguet says "a few"
stores in the Eastern U.S. are now selling Mac desktops, notebooks, software and accessories, too.
Analysts say it's the right move.
"There's a huge captive audience with Best Buy," says Piper Jaffray analyst Gene Munster. Apple "wouldn't have a 50-store rollout if it wasn't something they believed was going to be a bigger rollout."
Apple's current channel for Mac sales includes its online store, Apple retail stores and Apple resellers, including third-party retail stores like
"Beyond CompUSA, there's no one that really pushes the Apple brand
besides Apple," Munster says. Apple specialist stores, he says, are "like converted
. They've very eclectic, but no one goes in to them."
Munster calls Apple's expanded presence at Best Buy a "game-changer for their retail strategy." He says it's hard to predict how much of an impact the Best Buy deal will have, but he believes it will certainly be positive. He does not own shares of Apple, and his firm doesn't do investment banking with the company.
Jonathan Hoopes, an analyst with ThinkEquity Partners, agrees that having Apple take up shelf space at Best Buy is great and also sees customers getting lured in by Apple's new Leopard operating system in the spring. He does not own shares and his firm does not do banking with Apple, but it makes a market in Apple shares.
In addition, he expects Microsoft's Vista OS launch to benefit Apple. "If Windows XP is any indication, Microsoft will spend a lot of money on advertising," he says. "There should be some good buzz around PC refresh and the PC industry in general."
Combine that buzz with a larger retail presence, and Apple is well-positioned for even further gains in market share.