Apple 2.0

Covering the business that Steve Jobs built

The survey that squashed Apple - Part 2

October 2, 2008: 7:28 AM ET

On Tuesday we looked at one part of the ChangeWave survey that helped trigger the largest one-day drop in Apple's (AAPL) share price in eight years. It showed a falloff in corporate plans to buy Apple computers over the next 90 days. (See here.)

Today we got our hands on the second part -- the consumer part. And while it goes a long way to explaining why Apple's shares were downgraded by analysts on Monday, it also suggests that the bigger problem is a broad decline in spending on consumer electronics -- one that will not only color Apple's guidance when it issues its quarterly report later this month, but could take much of the joy out of this year's holiday sales.

The good news in the survey is that 23% of respondents -- of 4,262 early adopter types contacted between Sept. 16 and Sept. 26 -- said they plan to buy an Apple laptop computer in the next three months.  Another 17% said they plan to buy an Apple desktop.

The bad news, as you can see in the chart below, is that those numbers are down pretty sharply from the month before -- a full 5 points for laptops and 4 points for desktops.

"These are the weakest numbers we've seen all year for Apple in terms of future buying," writes Paul Carton, ChangeWave VP for research. "And the biggest drop in 2 ½ years."

Carton's survey of spending over the past 90 days suggests that Apple should have no trouble meeting its sales targets for the quarter that ended Sept. 27. But his findings for the next 90 days suggest that Apple's guidance -- always conservative -- will be even more so this time, and could spook already skittish investors.

But what's really scary is what ChangeWave discovered when it asked those same 4,262 early adopters whether they were expecting to spend more (blue line) on consumer electronics over the next three months or less (red line):

Note that intentions to spend on consumer electronics usually trend up before Christmas -- sharply two years ago, less so last year. What we are seeing here, says Carton, is "the weakest 90-day outlook for electronics spending ever recorded in a ChangeWave survey."

So while we may be looking at a tough three months for Apple, the prospects for the rest of the consumer electronics industry this holiday season could be truly dismal.

Thanks to Paul Carton for talking us through the surveys, and for permission to repost his charts.

From the Changewave Alliance website:

ChangeWave runs a proprietary network of 15,000 highly qualified business, technology, and medical professionals referred to as the ChangeWave Alliance. Alliance members are credentialed experts in leading companies of select industries who spend their everyday lives working on the frontline of technological change. (link)

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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