“Steve Jobs says analysts should stop worrying about market share and focus on profits… Apple’s Macintosh computers have long been considered more elegant, easy-to-use, and innovative than their Microsoft Windows and Intel rivals. Yet Apple’s market share has slipped inexorably. It dropped from 9.4% in 1993 to just 3% in 1997, the year Jobs was rehired to run the company, according to Gartner Inc. By then, most companies and consumers had already made the jump to Wintel, due to cheaper prices and a wider selection of software titles,” Peter Burroughs writes for BusinessWeek.
“[In 1997,] Jobs embarked on a plan to win back a point of market share each year. That would have been more than enough to deliver brisk revenue growth. But despite a series of impressive machines such as the iMac and the 17-inch PowerBook G4 laptop, and a pricey ‘Switcher’ TV ad campaign to win converts, Jobs has been unable to stop the bleeding,” Burroughs writes. “According to Gartner’s preliminary market-share data, Apple held just 1.8% of the worldwide PC market in the fourth quarter of 2003. And some think Apple’s share will fall further, if it can’t keep pace with surging overall PC demand. Salomon Smith Barney analyst Rich Gardner expects Apple to post PC unit growth of 6% in 2004 this year, vs. 11% for the entire PC industry. One reason is price. Gardner says the average price of a Mac is $900, although half of PC buyers now spend less than $600.”
“That sounds awful, but it might not be so bad — if Apple can maintain its success with the iPod, and follow up with other non-Mac products (the iPod works with the Mac as well as with Wintel PCs),” Burroughs writes. “…the Mac is currently enjoying a growth spurt. Sales grew 12% during the quarter (iPod sales grew 238%, by comparison, but off a smaller base). The sleek PowerBook laptops remain hot items. Sales of higher-end PowerMacs — used by publishers, ad agencies, and the like — are getting a lift from the economic rebound. Some evidence even points to Apple turning around its long decline in the education market. In a survey of school districts, market researcher Quality Education Data found that 30% plan to buy Macs this year, up from 21% in 2003. And brisk sales of the latest upgrade of Mac OS X, called Panther, suggest that many Mac customers are planning on sticking around.”
“[Jobs] wouldn’t mind if those analysts would start measuring the Mac by the profits it produces, rather than by its market share. ‘We’ve got 25 million customers that want the best computers in the world. If our market share grows, we’re thrilled. But we’ve held our own, while our rivals were losing hundreds of millions of dollars a year,’ he says. ‘We’re in pretty good shape,'” Burroughs writes.
Full article here.
Wow, someone who actually has a brain writing about Apple’s market share? I’m shocked. I still don’t understand why market share has taken precedence over profits. Maybe a few people on Wall Street will see this and rethink things a little.
FP!
“We’re in pretty good shape”
Amen.
Good article. It always confused simpletons to see Apple market share shrink – hence quick to predict its doom – and still combine that with Apple being the one of the two only PC makers in the black.
I repeat myself but simpletons should really try hard and realize that thinking of Apple as a doomed company is equivalent to believing Porsche will soon disappear because Volvo has doubled its market share of heavy trucks. It does not matter if Dell, Micron, etc. are selling 10 times more dumb terminals to corporations for their clerk to spend their daily slavery in their cubicles: it does not affect Apple’s market, revenues and profitability. Exactly as Volvo selling trucks has no effect whatsoever on potential Porsche owners.
I think how the analysts think is as follows:
Apple posts profit, good. In order for Apple to keep making a profit, they need to keep selling computers and stay competitive–this means equivalent/ported software needs to be found on Macs. If market share decreases, then software companies will be less likely to port their software. Rinse, repeat. In this sort of equation, market share is essential. The only problem I see with this view is that it doesn’t take into consideration the fact that the current base of users isn’t going to switch to PCs any time soon and said base is enough to keep MS Office and Adobe writing software for the Mac OS. This user base is increasing, not decreasing. It just isn’t increasing as quickly.
-Joel
Joel, spot on. I’ll add that if any of these software developers were going to make the jump, they would have used the increased development costs of porting to OSX as the excuse. Now that the codebase is essentially ported, the costs of maintainting a Mac version is only the cost of adding new features. So basically, providing we all carry on buying our software rather than stealing it like the majority of Windows users do, neither we nor the developers have anything to worry about.
As my niece would say in her own concise and most adolescent way, “Well, duh!”
Steve is right about apple and profits, steve is wrong on marketshare. The world has moved to cheap windows that dont work well but they can go to any store in the world and buy titles for that Intel. You can no longer just walk into a store and buy anything Mac. Ill say it again for Steve, Steve clean up the allways held behind consumer line and get your product in places other then that apple store in Kaliifornia. In the whole state of South Carolina not one Apple store. Steve how the hell you going to sell a mac in S.Carolina when you dont have 1 store? and every Walmart,Sears,Staples etc has Pc’s and gobs of software to go with those pc’s. Steve do you here me? This is what is killing your market. happy anniversary. still waiting for a decent Imac G5.
“no Apple”…
You’re here on MacDailyNews.com, so I’m assuming your browser also has the ability to go to http://store.apple.com ? That’s closer than any retail Apple Store.
And there are quite a few software titles there, too. Likely anything you would need.
Simply because WalMart, Staples, etc, sells PCs… doesn’t mean you need to give up and buy one.
touch and try before you buy, the problem with apple is the 97% of the population is wanting to walk into a store and buy and take home at that moment, not wait for weeks for a banged up product to roll off of Ace ventur’a Ups truck. Apple has the best software, and after they get that G5 in every product then the best hardware but still joe consumer never hears or see’s a Mac product in the state. You have to know Mac before you begin your search of where you can find one. In the Pc world you can stumble into them eveywhere. Joe consumer has decided today im getting that machine so he wanders into walmart and comes home with something other then Mac. over 10 years ago i bought my first Mac. I had wandered into a Walmart and spotted something that was above the fray and it was branded Apple. After doing a little research i knew Mac was the way and went back to that store and took home a new Mac from a local store. try doing that today. this is why marketshare sucks for Apple.
My father had his own Hardware business and one of the things he use to tell my mom is you cant sell out of a empty store meaning you had to have that product on the shelf. Apple has to get that product on the shelf. They have the best stuff its just not on that shelf.
Yeah, Michael, here’s the thing, buddy. to go to store.apple.com you have to have a computer, therefore, if someone has no computer they cannot, verywell, go to store.apple.com.
Also, I’ll buy a cd online, or some RAM, but a whole computer? I’d rather have someone to ask questions of, and who I can easily take back if there’s some glitch. You will, of course, say that your mac has never had a hiccup once in the 93 years that you’ve had it, but believe it or not, in dealing with microtechnology, things aren’t always perfect.
We should not hide our heads in the sand. The low market share Apple has right now is a dangerous situation and is one of the main reasons in itself why Apple is not growing, people hold of, even if they really would like to, buy a Mac. But we know Apple is working very hard to improve sales. But it remains very dangerous to be sattisfied with the small share they have right now. Apple needs to keep striving for at least 5% at the short term and at 10 they will be save. But I am still confident, Apple’s offering in software (open source and (MS) compatability) and hardware (servers and clients) is the best ever and hardly to resist even for any PC lemming, and MS has reached its all time low if it comes to popularity.
http://www.snopes.com/disney/films/lemmings.htm
ok people, especially those looking for “shelf space”:
Apple is no longer in the commodities market. they will not market any product to the masses. they tried the lemmings approach – didn’t work and if anyone remembers that commerical, then i am impressed (i have a quicktime copy).
Apple is the BMW/Mercedes/Audi/Porsche of the computer industry. do they concern themselve with market share? can anyone just go pick one up? are they mass market vehicles? no, no, and no.
the Mac and related systems is geared for certain individuals who have similar traits – we expect our computer to work. it is a tool to get things done. it is a tool to engage our minds. if you share these traits, you will own a Mac or really want to get one. and if you really want to get one, there are multiple avenues to acquire one.
so if you are upset that there are no shleves to get mac, sorry. tough. if that is your primary buying requirement, then get a PC, a mac is not for you. if you really want one, then get one and stop bickering about it.
Apple does not and will not try to please everyone, they seek to please their own market. you are either part of that market or not. if you are not, that is ok. there are computers for eveyone. the mac is not for eveyone.
get over it and stop bickering.
webbyswim is saying accept that the population will never see or here a mac, accept that its the bmw of computers and because it is it doesnt need to be in stores? wtf? accept that Mac has the smallest marketshare as long as it survives. what webbyswim is saying is accept no growth. i love what Bentile says, someone with no computer is supposed to know Mac through what telepathy? mac zealots love their Mac so badly they defend every stupid thing apple does like not marketing computers to the consumer or not putting those machines where a new user may see them. go pick up a Pc magazine and you wont see 1 mac, go to the store and you wont see one mac. this philiosophy really helps in selling macs. Bentile you are right on, webbyswim is floundering in his idea of its the best machine made but who cares if no one knows of them, see’s them or ever gets to stumble into one in a store.
bleh
you.ve gotta put the thing in stores…when i was shopping for my mac, i hadn.t used an apple since a IIgs…i had no idea what the operating system was like…sure, i could download screenshots…but do you really want to spend 2300 dollars based on screenshots…how do i know what it actually looks like and works like? Whose opinions do i trust? yours? people from MDN or Macrumors? Apple’s phone salespeople? I don.t think so…I want to actually use it and play with it…and see if i like it. And to do that, it needs to be on a shelf somewhere…now i.m all for the “high end” apple idea…so don.t put it in sears…put it in Lord and Taylor or something…you know high end boutiques…but egh…so far apple seems happy with CompUSA [ick]…but luckily i had one around here…was able to go play with a computer, decide it kicked wintel’s ass and walk home with a PB. some of the people on here are just morons.
webbyswim:
“Well, duh!” Any intelligent person would agree there are only 2 kinds of consumer computers in the world today: Macs and PC’s. I can’t imagine anyone with half a gray cell hasn’t heard about the Mac. If someone has developed some preconceived notion that Mac’s are only for “graphics users” then they have aptly demonstrated that they are unwilling to study the issue any further.
Gosh, I hope I am not guilty of sampling bias, but every Mac person – but one – I have met has used both Macs and PC’s, and has chosen a Mac. Hmmm, has anyone ever published data comparing PC and Mac users from a sociological, economic, educational, and/or political perspective? Jus’ curious.
As long as Apple continues to innovate and press the envelope Apple will do jus’ fine. When Apple becomes lazy and complacent then we will all be cryin’ in our coffee.
As an IT manager in higher ed I can tell you that we are standing at the turn of the tide. More and more IT pros are realizing that, in light of the huge security issues involved, it is possible to risk your job for recommending Microsoft for mission critical systems.
But the key is that even if people start buying more Macs, Apple’s marketshare could easily continue to slip as more computer purchasing is done in 2nd and 3rd world countries. The reason for this is simple math. Let’s say, hypothetically, that Americans bought 100,000 Macs in 2003 and they bought 1 million PCs. In 2004 Americans might buy 120,000 Macs and 1,005,000 PCs. The difference in market penetration, year to year, was actually to the good for Apple. However, the Chinese government might purchase 2 billion PCs in 2004. This purchase represents a very serious slide in Apple’s worldwide market share even though Apple sold more machines in ’04 than ’03. It’s critical to remember that despite the huge influx of new PC purchasing, NO sales were taken away from Apple (cf. the earlier comparison of Porsche to Volvo trucks) and thus Apple profits continued to rise.
The same phenomenon can also happen here in the states where the US government may decide to make a huge (but dubious) investment in PCs which further makes it appear that Apple’s sales are eroding. Add to this fact, governments, corporations, and individuals replace their PCs about twice as often as those who use Macs. This further skews the stats.
Microsoft and PC box manufacturers make their money by charging at the margins for a machine that has to be replaced twice (or more) often than the more expensive Macs.
This is not unlike the ridiculous complaints about the lack of job growth in the US despite the fact that jobs are continually being created. The stats that are typically quoted do not mention that the population is rapidly growing in the US due to immigration. Jobs creation is barely keeping up with population growth. In the same way, as long as new markets are opening up to computer manufacturers and as long as PCs last less than half the length of Macs, PC market share increases will continue.
So, the takeaway people need to consider is not relative market shares but growth in real numbers. This is why Apple is profitable, even while the company reduces their prices and experiences reduced market share.
-B
Beeblebrox:
Good point. PC owners replace their machines. Mac owners upgrade.
only reason that stands true is for 5 years moto has staggerd,stalled,stumbled,stalled again now at 1.33? so us Apple lovers had no reason to buy a new machine while those Pc’s where getting faster and faster and faster lets see 3.2 P4 vs 1.33 G4 Im not a rocket scientist but here you dont need to be!
Waiting:
Your assertion is untrue in my experience. The speed of P4s only began besting G4s in the last couple of years. I don’t want to get into a speed debate but historically Moto’s G3 and G4 chips have benchmarked at roughly twice the speed of similarly clocked P4s.
Even now I have faculty members on iMac 333mhz G3s running Panther that run rings around any XP/Pentium box clocked below 800mhz.
In my experience, a dual 1.42Ghz running Panther beats the pants off of nearly any XP machine out there below 3Ghz. Of course, G5s put the Intel products to shame so all of this is moot these days anyway.
-B
Mhz = one million ‘cycles’ per second.
Mhz is not HorsePower it’s RPM.
Google it yourself.
iPod success is great for Apple overall, but as a Mac owner, I care about Mac itself.
I don’t mind so much about Mac market share, either, but I care about the GROWTH of the Mac user base. As Joel said above, for one thing, you need growing base to justify writing software for it.
If the Mac unit sales growth is below overall personal computer growth, that’s okay to me, as long as Mac unit sales is growing. But I read that 2003 Mac unit sales actually went down? That bothers me. I think the Mac unit is a long way from the point where the low unit sales isn’t financially viable, but I would like to see unit sales growth head in the positive direction. The 2003 notebook number growth is good though.
I think with the 20th anniversary of Mac, it’s time to renew the drive for more sales (I think Apple is trying, though). You know, there are various ways to do it — product/company image, product saling point, sales organization, Mac-only “killer apps” to attract new users, etc — as Apple people can figure out. I am inclined to think that with G5 and OS X, it has a good starting point.
According to this, 4th quarter sales were up 12% over last year.
-B