Big Macs on campus
In five years, Apple has switched places with Dell as the student laptop of choice — Shares of Microsoft (MSFT) dropped nearly 2.5% in the opening hour of trading Wednesday thanks in part to a downgrade by Global Equities Research's Trip Chowdhry that included this bulletpoint:
Context & Ripple Effects
The student market has been Apple's beachhead for years: The Daily Princetonian reported back in October 2007 that on-campus Mac users had quadrupled, Forbes found consumers craving Macs that December, and Investor's Business Daily predicted Macintosh share gains at the same time. The Register documented US buyers shifting toward Mac laptops through late 2008.
What is new in Fortune's August 2010 reporting is the completion of that arc: over five years, Apple and Dell have swapped places as the student laptop of choice, and analyst Trip Chowdhry of Global Equities Research cited the shift in downgrading Microsoft — a call that helped knock MSFT down nearly 2.5% in Wednesday's opening hour.
First-order effects
- Dell loses the campus position it held five years ago to Apple, while Microsoft's downgrade by Global Equities Research translates into a nearly 2.5% opening-hour drop in MSFT shares.
Second-order effects
- Dell and other PC makers are pushed to compete for student buyers on price against a rival whose campus gains trace to brand preference rather than specs, squeezing margins in the education channel.
Third-order effects
- If students who standardize on Macs carry the preference into their first jobs and purchases after graduation, campus share becomes a leading indicator for consumer PC share — the pattern IBD flagged as likely back in December 2007 now visible in the swap with Dell.
The trend: Computing is fashionizing from the bottom up: campuses adopt the status-brand laptop first, and analysts increasingly price that preference into the PC incumbents' stocks.