“Apple, which has outpaced the overall personal computer market this year despite its strategy of eschewing discounts, showed its first signs of weakness in November,” Yukari Iwatani Kane and Justin Scheck report for The Wall Street Journal.
“Sales of Macs in U.S. stores last month declined 1% from a year ago, while industry-wide PC sales rose 2%, according to research firm NPD Group Inc., which tracks retail sales,” Kane and Scheck report.
“NPD analyst Steve Baker blamed a 35% drop in sales of desktop Macs, noting growth in Apple’s laptops still outpaced rivals,” Kane and Scheck report.
MacDailyNews Take: Nowhere in the article do the reporters bother to report on what any rational observer would consider the salient bit of information: People are now buying more notebooks than desktops. This we just happen to know, no thanks to Kane and Scheck. It would be nice to know exactly what NPD thinks what the split is, but the most important point is this: Apple’s MacBook family is kicking ass and taking names. We had to go to Reuters to find out that NPD says “Apple’s notebook sales, however, were up 22 percent in November, while Windows sales rose 15 percent. Windows desktops sales [fell] 15 percent and Macs [were] down 38 percent [in November]. 38% or 35%, which is it guys?
Kane and Scheck continue, “Until last month, Apple’s premium-pricing strategy seemed to be paying off, as the company boosted profit and gained market share from Windows-based PC rivals like Hewlett-Packard Co. and Dell Inc. at a steady rate. In October, for example, Apple shipments grew 28% from a year earlier-four times the growth rate of the overall market, according to NPD.”
MacDailyNews Take: If more people today are buying notebooks than desktops today (trends, if not reporters, indicate that they are) and Apple’s notebook sales are up 22% in November, then their premium-pricing strategy is still paying off. And, oh, by the way, there were five fewer holiday shopping days this November than last.
There are three kinds of lies – lies, damn lies, and statistics. – Benjamin Disraeli
Kane and Scheck continue, “Apple Chief Executive Steve Jobs told analysts in October the company wasn’t cutting prices on Macs, which make up 46% of the company’s revenue, because ‘we’re not tremendously worried’ the downturn will drive customers to cheaper PCs.”
“Apple has steered away from the low-margin netbook market in favor of higher-end computers. “We don’t know how to make a $500 computer that’s not a piece of junk,” Mr. Jobs said in October when the company reported earnings,” Kane and Scheck. “Apple rivals like H-P and Dell offered discounts weeks earlier than usual this holiday season, dropping some prices by as much as 50%. Mr. Munster said since last December, the average Windows PC price is down 35% to 45%; in contrast, Apple has offered only modest discounts of 5% to 10% on its PCs, analysts said.”
MacDailyNews Take: Again, you won’t get this from the mainstream tech media, but read between the lines: Dell and HP have slashed prices to remain flat (+2%) in November. Apple has kept prices (and margins) in line to remain flat (-1%) in overall unit sales in November YOY. That is the real story. The real story that will be mischaracterized in reports all day today and beyond and that will likely negatively affect Apple’s stock price.
Kane and Scheck continue, “The strategy translates to a big bite into consumers’ wallets. On Amazon.com last week, an H-P Pavilion laptop with a 14.1-inch screen was marked down from $1,074 to $760. In contrast, an Apple MacBook with a 13.3-inch screen, less memory and less storage capacity was $966, just $33 below its list price.”
MacDailyNews Take: The real headline: “Apple’s notebook sales growth outpaces Windows PCs’ even as Apple holds the line on pricing while desperate Windows PC Box assemblers slash prices.”
Kane and Scheck continue, closing their article with, “Piper Jaffray [analyst Gene Munster] said he expects the company to recover in coming months, and said he is maintaining his prediction that Apple next year will increase shipments by 10%, while the rest of the industry falls 5%. Shaw Wu, an analyst at Kaufman Brothers, expects Apple to sell 2.7 million computers in the current quarter ending in late December, a 17% increase from a year ago. He expects industry-wide PC shipments this quarter to be about 85 million. Despite short-term weakness, analysts expect Apple’s products to remain more profitable than many rivals’ computers. The MacBooks are forecast to deliver close to 20% profit margins, compared with 6% or less for competitors, said Toni Sacconaghi, an analyst at Sanford Bernstein & Co.”
MacDailyNews Take: Way to bury the lede, guys, you hacks. One more time: Apple’s high margin notebook sales are up 22% over last November – in the current economy, no less.
Full piece here.
MacDailyNews Take: We wonder why The Wall Street Journal’s article is written in such a way. If you do, too, perhaps the hatchet men, er… “reporters” can help us all with the answer:
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In closing, if Apple wants to sell more desktops – meaning, if the desktop market is worth pursuing anymore – then Apple should consider offering a mid-sized tower Mac. If not, so be it. There’s no sense making a product for a market that doesn’t meaningfully exist (Cube). If notebooks are the future, and all indications are that people are strongly going portable, then Apple is doing very, very well: increasing notebook sales and maintaining strong margins all in a tough economy.
