“Dividing notebook price ranges into fifths, or quintiles as the statisticians call them, Apple already has a 29% share of the U.S. market for notebook computers in the highest quintile — up ‘stunningly,’ notes analyst Toni Sacconaghi Jr. of Bernstein Research, from 8% three years ago. In the consumer and education market (i.e. excluding business computers), Apple share of the top quintile notebook market is nearly 46%,” Phillip Elmer-Dewitt reports for Fortune.
“While other PC makers have been lowering their average selling price, Apple has been steadily increasing its price premiums relative to the rest of the market — great for keeping profit margins high, but not so good for growing market share… If you look at the high-priced markets Apple chooses to play in, says Sacconaghi, you see that it already has a surprisingly dominant market share — without much room for growth.” Elmer-Dewitt reports.
“‘Accordingly,’ Sacconaghi concludes, ‘we believe Apple faces a trade-off in its Mac business over the next 2 – 3 years: either lower price (and margin percentage) to sustain share gains, or retain its current price premiums and face slowing unit growth,'” Elmer-Dewitt reports.
Full article, including a graph from Berstein’s report showing the rapid growth in Apple’s share of the premium notebook market from 2000 to today, here.
MacDailyNews Take: Developers should take note of the fact that many more people (and those that are most likely to spend money) have Apple Macs than most people think.
YES! Lower prices -> increase market share.
Apple’s goal should be no less than a Mac on every desk, lap and pocket (=iPhone) in the world. Take no prisoners!
After all, they have something like $15 BIllion (yes, that’s a B) cash in the bank. How much more do they need? (Well, that’s the wrong question really, because if they lowered their margin from 33% to 20%, their profits would soar even more because of the increase in market share). Boy I wish I was CEO of Apple…
One thing to remember, its a Forture article. They have no requirement to deal in facts, only what looks good.
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sounds like fuzzy math to make something seem more impressive than it really is
I luv statistics.
100% baby. Yeah Apple has 100%.
Apple has 100% of notebook computers with the Apple logo on the them. Can´t touch that!
Won’t have that sort of notebook market share for long if they continue with only glossy displays.
People in the premium market need choice.
Glossy is good for some things, but reflections on a laptop screen which is moved place to place is inexcusable.
To quote: “While other PC makers have been lowering their average selling price, Apple has been steadily increasing its price premiums relative to the rest of the market — great for keeping profit margins high, but not so good for growing market share.”
This sentence is rife with fallacies.
1. Apple has not been increasing its price premiums. Prices for Macs of all types have been stable for a long time. Instead of raising price they have consistently improved the hardware that you get. 2. Their average selling price is nearly identical to the best selling PCs. Take a few minutes and compare the products offered by Dell to those offered by Apple. Once your research matches two machines on a hardware level, you will see that the prices are close to the same. 3. There’s also an optical illusion involved here; the word ‘relative’ is the clue. When sitting on a train, with another train sitting beside it visible out the windows, it is sometimes hard to tell whether it is your train or the other that begins to move.
And as far as real prices go, I bought the first MAC on the market in 1984. It cost $5000. The MacBook Pro I have now is an incredibly better, more powerful machine and cost $1500 less. And that doesn’t even factor in the differential due to inflation.
Some people might argue that students are a relatively poor segment of our population but they seem to be adopting Macs at a very high rate.
This guy needs to think again.
I agree with Matte Boy.
Glossy on a laptop just plain sucks.
MacMan, last year AAPL was sitting at $80+ per share, a huge run-up (for me at least) from my average pps of $12.50.
TODAY it is sitting at $170+ per share . . . a 110%+ increase from last year alone!
And you’re telling us that YOU would do better than SJ at running Apple? Unless you’re the CEO of GOOGLE or Warren Buffett, you might want to tone it down a bit, old boy.
Feh. Apple has very competitive pricing in the segments they choose to compete in, and they’ve been gaining market share steadily in those segments. The growth may slow given how exponential it’s been, but that’s no reason to change course. Apple knows better than to go after bottom-feeder customers who purchase low-margin computers and disproportionately use expensive tech support resources.
Let Dell have those customers — that’s a strategy that’s great for Apple’s bottom line and stock price.
Perhaps market share will rise radically when we get the new iPhones, and mini MacBooks and iSlate computers.
How many people need whacking great big desktops just to do email and surf?
@Pete in Seattle
“Glossy on a laptop just plain sucks.” Then don’t buy one! There; your arm has been officially untwisted.
“Apple holds 29% share of premium notebook market; 46% when excluding business computers…”
…..exclude all non-Apple computers and Apple has 100% of the notebook market!!!
The last line seems to defy logic – “There is little profit, if any, in selling a laptop that costs more to build and service than you make in sales”? Eh? I’d say there is *no* profit. Unless you’re hoping for additional software, etc. sales which I don’t think anyone should take for granted.
Matte Boy and the ilk get over yourselves. On the laptops – they sell both! What a concept.
The ones that complain about the iMac at least don’t have the option. I bought the glossy on my MB Pro and love it – if you don’t, get the matte one.
Sigh. MDN Magic Word “Love” – I love it when people think before posting.
I won\’t buy glossy laptops either.
Since Apple only offers glossy MacBooks, guess I\’ll stick with my reliable Dell on XP.
Won\’t have to learn a new OS either.
“I bought the glossy on my MB Pro and love it “
Glossy screens cause eye problems, eyestrain from the constant refocusing between the image and the reflections.
That’s why glare screens were introduced for CRT’s, now glossy screens are back without a choice in certain models of Apple computers. Like the iMac and MacBooks. imagine having to put glare screens on your Mac?
So Apple is screwing itself of sales because they are mandating glossy screens.
I won’t buy glossy, niether did my XP switching friend.
“Since Apple only offers glossy MacBooks, guess I\’ll stick with my reliable Dell on XP.”
Reliable Dell? That’s an oxymoron!
So a bunch of snobs are buying MAC laptops. Big deal.
Microsoft Windows Vista.™ For the rest of us.
Your potential. Our passion.™
seriously, who cares?
I have a glossy screen iMac at home where I control the lighting and a matte screen on my laptop on the road where I do not control the lighting.
I prefer glossy screens as long as they are reflection free.
Dell
1: Matte screens – Good
2: 5 year FREE warranty – Good
3: XP – sucks, but usuable or use Linux for free. – Bad
4: Fully featured hardware or not, your choice – Good
Apple
1: Glossy – annoying, no choice – Bad
2: 1 year free, 3 year paid – Bad
3: OS X – great OS – Good
4: Premuim hardware only, limited choice of configurations – Bad
Dell wins
Wow. This is great. Narrow the definition of the market, and Apple has great numbers.
Guess what?? Apple owns 100% of the Macbook market! 100% of the Macbook Pro market as well!
You guys might be missing the “Fortune” logic – what he really means is that everyone else has been trying to maintain a competitive edge by cutting their prices, thereby cutting their margins. Since Apple doesn’t cut their margins, they are, ipso facto “increasing their premiums”. Heheh. Nice work boys.
But I think Fortune misses the real point. (Not surprising, really.) The real point is that the INDUSTRY faces a hard decision over the next 2-3 years. Will they let Apple take increasingly large chunks of the PREMIUM laptop market share? The top 20%, top 30%, top 50%.
The decision is simple: keep trying to out-discount each other, and keep losing money on the low-end crap in order to gain volume? Or compete with features and quality in order to make more profit per unit. Sell half as many units and make twice as much money should be the goal. Sounds crazy? Not if you run numbers.
How much net profit does Dell make on a $599 laptop? $50? $75? Especially when you factor in the returns and repairs on the garbage they put out. Now how much profit do you suppose Apple makes on a $1099 bottom-of-the-line MacBook? Would you say $100?
So there’s a simple number test for you. If you can make a quality computer, sell it at a $100 margin instead of a $50 margin for your crappo laptop. Even if you sell half as many, you make the same money. And if you manage to eke out $200 in margins, you make twice as much. Bingo. Payoff.
The other big companies may eventually learn that the cheap knock-off companies will always be there to offer the worst product at the lowest price. Don’t bother with them. Don’t compete in that market. Apple doesn’t, and look at their bottom line. They, not Apple, have the difficult decisions to make.
Great.
When Steve Ballmer artificially narrows the Mp3 market to hard-drive players and announces a 10% marketshare for the Zune, MDN blasts him for not comparing it to the total market and rest of the iPods.
When some random guy from Fortune artificially narrows the laptop market and announces much higher Mac marketshare in that narrowed market, MDN… just acts smug about their being more macs than most people think? Yeah, real fair and balanced…. considering all the rants about biased journalist bashing the macs, MDN might want to practice what it preaches.
^will probably get deleted by an insecure MDN webmaster
Have you actually used a glossy-screened MacBook? I have, every day for the last 6 or 8 months, and yes, I’ve been moving from location to location many times a day (I’ve been using it for taking notes in various classes, all of which have strong overhead lighting).
Do you know how often reflections have been a problem? Never.