“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.
Did I say 4th? Meant 1st.
-B
Joe said “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.
and Beeblebrox said “According to this, 4th quarter sales were up 12% over last year.
But according to this article on MDN – see below – PowerMac sales fell from 221,000 to 206,000 units in the last quarter.
However you want to look at it, that is NOT good news!
“Credit Suisse First Boston: ‘several years of flawless execution required for Apple to return to peak profit margins’
Thursday, January 15, 2004 – 01:01 PM EST
“Apple Computer stock was lower as Credit Suisse First Boston detected a “worry” that the computer maker’s fiscal first-quarter PowerMac sales of 206,000 units were below the fourth-quarter level of 221,000 units,” Forbes reports.
“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.”
I’ve heard this analogy before, but I’d point to one I think may be more appropos.
BMW is developing hydrogen powered vehicles. The issue is getting fuel for them. If there aren’t many hydrogen powered vehicles, you want see many gas stations delivering hydrogen. Which will make the vehicles unattractive to consumers (If I have to drive 50 miles to fill up my tank, I’m not going to buy one). Consumers don’t buy them, BMW won’t build them, etc.
That said, I do believe software companies ignore Macintosh at their own peril. For entertainment value, I went over to Forbes and looked for the top computer companies which produce software for sale. #1 was IBM. They produce Macintosh software. (ViaVoice, Lotus Notes) #2, Microsoft–again, producing Macintosh software. #3, Intel–nope. #4, Cisco–yup. (IP/TV, CPE Commander) #5, Oracle–yup.
Now, obviously, they don’t produce Mac versions of everything. But where it’s appropriate, they do it. Why? Because without a Mac version, you can’t sell your PC software.
Where I am working now, in fact, there’s a hunk of customer money waiting for a carbonized version of our software. They’ll wait because we’re the only one with a Mac version–period. The others ones aren’t even being considered. Are all of the seats being sold Mac versions? Nope. Not even the majority are Macs. But they won’t buy unless there’s a Mac version.
I used to work for a company that sold cross-platform software for school administration. I was once told by a salesperson that Mac sales “only account for about 25% of our sales.” His theory was, “Well, we sell two versions: A Windows-only version and a Cross-Platform version and we sell about 50-50 of each.” I then asked him if we didn’t sell the cross-platform version and one of our competitors did, do you think our sales would drop by only 25%? Thus the Mac version accounts for 50% of our sales, even though it only accounts for 25% of our users. He had to think about this a bit, but he did finally admit that I was right.
All i am saying is Apple should take the ipod,emac,some hot titles and a few other things and get a Apple Display into some places other then apple stores. A Mac display(end counter) that can be put into stores so at least people will see them. right now you have to know Mac to find Mac. wherever those ipods are they should be selling emacs next to them. Put the lowend consumer line in consumer stores. Keep building those apple stores. make sure those ipod buyers know that Apple makes computers with the best software in the world. Steve you want my number? i got a few other idea’s . simple idea to grow the base.
You aren’t going to buy something you have no knowledge about and never come into contact with, particularly when the competition is ubiquitous.
I know very few (hell, none) people who are not Mac users that have ever seen OS X running or know anything more about modern Macs other than that the are cute looking and are supposed to be easier to use. Except for one other Mac user, the only modern Mac the people in my office (around 20 people) have ever seen as a tangible object is my iBook.
People can be aware of your brand as a name, but there is another kind of brand awareness where people of a sense of what it is to use your products, etc.–a real rather than abstract sense of what the company makes. It used to be that most of the market looking to buy a computer had a real sense of what an Apple computer was. Apple lost that connection to most of the market while devoting itself to selling overpriced, mediocre machines.
Apple no longer makes overpriced, mediocre machines. However, they have become such a small player that they have a long way to go before buying a Mac even becomes something a large number of PC buyers would even consider. And it isn’t because consumers are devoted to and love Windows, it is because the vast majority of them have no sense of what a Mac is. Try for yourself–ask people at random what they think of when you say Macintosh computer. Bet you the majority of your responses will be:
1. I don’t know, I haven’t used one since I was in school.
2. Expensive.
3. Slow.
4. Doesn’t run a lot of software.
5. Cute.
6. Supposed to be easy to use.
7. Expensive.
And why? Because when Apple cratered they did not become BMW or Mercedes. People know what BMW or Mercedes are and many wish they could afford one. The same cannot be said for Apple–they could cut the price for Macs in half and wouldn’t double their market share.
Okay, this doesn’t directly involve the thread going on here, but something has been bothering me the past couple of days and I had to put it somewhere:
PANTHER’S NETWORK BROWSING IN THE FINDER IS THE WORST PIECE OF CRAP I HAVE SEEN IN YEARS.
Slow, buggy, machines either don’t come up or take five minutes to appear, connecting to them is pain in the ass and you can’t disconnect. Absolutely terrible. One of the guys in my suite had a wireless network put in and they guy who installed it hadn’t set WEP to anything. I found this out when I opened my iBook in the office and found I had wireless. Also, the install guy had set C: to share on all of the machines, so you could access every file on this fellow had. Of course, when I went to show him this I fired up network browsing in the finder and…only my machine came up. I clicked around, and waited, and waited, and waited, and eventually his machines came up and I was able to connect and show him his files on my machine. I then tried to disconnect and it seemed to work. When I got home that night, I open the iBook and it tells me that a connection has timed out, or whatever, and do I want to disconnect. Uh yeah, I do, which is why I disconnected before. A few minutes later it again tells me the machine I’ve disconnected from twice is not available and do I want to disconnect.
What a piece of crap, and kinda nice that the first Mac this guy has seen running in years was futzing around forever trying to network browse.
Look, Apple did try to put themselves into more retail stores. They used to be in Sears and Best Buy and other places. So the product was on the shelves. Know what happened? Joe consumer walked in and said “I need a computer, what’s this Mac thing?” And then the salesperson said “You don’t want one of those, it’s not compatible, blah, blah, blah. You need this PC here.” That’s what happened, every time. Even CompUSA did it. So obviously putting the product on the shelf doesn’t work. You need trained salespeople who can demo the stuff. Sure, an iPod can sell itself, but Macs have to be shown to be understood. I see it every day. I’m an Apple-Badged employee in a CompUSA. The only way Apple will expand in retail is through programs like mine. Put an Apple guy in the store. Train staff and management. See sales skyrocket! Half of my sales guys own macs now. Apple is doing the right things. But they are being careful. Because throwing product into a Wal-Mart or a Sears just costs the company money and doesn’t translate into sales.
I don’t recall ever seeing a company issue a dividend based on market share. If you can’t run a business profitably, then you won’t be in business. The balancing point is to find the margin you require based on the share that you have. Could Dell get away with charging a premium for their equipment – probably not since there is enough competition to take away their market share and cause them to become unprofitable. Could Apple sell their computers for less – maybe – but unless they get a big enough jump in market share, their profits go away. That’s the thing about accounting – it’s a retrospective activity.