Is Apple’s market share really that important?

“Only a few years ago, Apple Computer’s high-end computer fare seemed stuck in a dusty corner of the market reserved for cult favorites. But with the breakaway success of its iPod music player, the company run by design snobs is veering surprisingly closer to the mass market,” K.C. Swanson reports for TheStreet.com. “But while iPods have put Apple back on the consumer map, there hasn’t been a related surge of interest in the company’s flagship computers, which accounted for 52% of sales in the most recent quarter. Apple accounted for a surprisingly small 3.7% of PC shipments in the U.S. during the second quarter, according to IDC. That’s actually down slightly from its PC share of 3.8% a year ago.”

Swanson reports, “Though many analysts think Apple will soon begin to expand that share, it would be a long, slow climb back to its peak in 1993. Back then, the company ranked No. 1 in the U.S. PC market, claiming over 13% of market share, just ahead of IBM… Regaining some of that lost share is key to ensuring Apple’s revenue growth. Merrill Lynch analyst Steve Milunovich estimates that each half-point of share that Apple can add is equivalent to about $1 billion in revenue. Apple executives have been quite upfront about the fact that PC share gains aren’t a primary company goal — a sentiment verging on heresy in the share-obsessed computer industry.”

“Instead, Apple is focused on broadly boosting growth in the top and bottom lines. As CFO Peter Oppenheimer explained on a conference call Wednesday, ‘We’re not focused on market share because we’re really not participating in the low end of desktops at $800 and below. We don’t think we can make a lot of money there,'” Swanson reports. “In other words, for all the democratic appeal of the iPod, Apple still sees its computers as premium products. It would rather reach its revenue targets by selling fewer, more-expensive computers than by hawking lots of cheap boxes… consumer lust for iPods shows no sign of flagging, and keeps Apple top of mind for PC buyers. And counting Wednesday’s [earnings] report, the company has now surpassed analyst expectations for seven quarters in a row. That doesn’t sound like a company to bet against.”

Full article here.

MacDailyNews Take: It is too early to measure whether the iPod “Halo Effect” will substantially increase Apple’s market share. But, as long as the ranks of Apple Mac users continue to swell, does it really matter? 25 million Mac users and growing is a fact that any software developer interested in making a profit should not reasonably ignore.

27 Comments

  1. I think what they meant by .. no sub eMac computers is..

    People don’t want underpowered computers.

    Will eMac prices come down.. DUH.. of course they will.. the point is.. the kind of power you can get for $800 nowadays is pretty pathetic (this is partly due to the fact that Apple insists on shipping Consumer PC’s with the Monitor Included)

    When you consider Apple’s defacto standard Apps like iLife.. and features like Automator and Expos�… You can imagine why they wouldn’t want to ship a PC weaker than the eMac..

    I mean.. that’s what people are clamouring for, right?

    A computer with less power than the low-end eMac?

    Wake up, people. This stuff is based on the assumption that Apple has fat profit margins. They don’t. Dell has fat profit margins.. around 8%.. Apple’s has gone from 3% to 7% just recently, thanks to the iPod’s bigger slice of the Apple revenue pie.

    Which should tell you that the iPod is more profitable than the Mac.

  2. Apple is doing just fine. Just take a look at their financials for the past few quarters and how incredibly high their stock is right now. That’s not even to mention their $5.5 Billion cash horde. Market share be damned…

  3. One topic that never seems to be mentioned where Apple is becoming a very dominate player is in the film/video/tv industries. Final Cut, DVD Studio Pro and Motion are making big inroads and they’re all running on Powermacs. It’s a small niche compared to the general consumer products but you’ve got to love the fact that Apple is a major player when it comes to creating media.

  4. A couple of comments.

    First, Mike where did you get your facts from?

    Second, Gambit, they are designer snobs, Steve Jobs is a huge designer snob.

    Third, well you all just get over this whole “Apple says jump and you all do.” Its just a f’n computer company.

    If Apple closed the doors for every. Yeah, it would suck, but give me a break. You guys and gals bash anyone who ever questions Apple or the great Steve. Blow out the candles around your Apple shrine, leave the basement… the rest of the mac community is sick of you zealots!

  5. I hope that Apple considers adding video content (beyond music videos) through the iTunes interface. The race is on to see who will capture the computer-as-tv-via-the-internet market which will emerge as codecs such as H264 is making it possible. Apple was wise to choose Dolby’s AAC for their audio choice. Perhaps iTunes will evolve into iEntertain or something similar. People are longing to see the quality of HD on their computer screens since WWDC and the potential for viewer interaction is enormous. Tiger will probably do for home entertainment what the iPod did for music on the go.

  6. damn it, damn, damn, damn, now I got it wrong again, lets try it again, If Apple closed its doors forever…there, you damn zealots, stop laughing, stop it….oh, this is just sad.

  7. (this is partly due to the fact that Apple insists on shipping Consumer PC’s with the Monitor Included)
    true. Apple DOES compete in the low end… however, they bundle the monitor in it, even though many (not all) buy a monitor with their computer, they can’t put a lowball price on the unit and say: *monitor costs extra.

  8. Market share is unimportant. Installed user base is important.

    Installed user base is what will determine whether software continues to be produced for the platform.

    Installed user base is increasing. It will continue to increase slowly with newbies and switchers while the whole virus/spurware/malware problem continues AND we encourage people to consider the Mac. I’ve got 1 newbie, one defnite switcher and one who will switch if his company laptop is taken away.

    No problems realted to market share at the moment.

  9. What’s with these analysts? The market today is a whole lot different than 1993. If nothing else, the shear number of PC’s sold is a whole lot more. How does 13 percent then compare to 3 percent now in the number of units sold? How much more competition is there now? Remember, 1993 is way before the internet as we know it today. There just wasn’t as compelling a reason to own a PC then. How bout we talk units sold and profit from those units?

  10. Maybe they should manufacture a small number of really shitty Macs. Really badly configured. Sans firewire. Shared memory graphics. Ugly as fuck case. Awful flickering monitor. Slow (but big) hard drive. Flaky RAM that doesn’t pass normal rigorous firmware checks.

    Advertise them in tabloid newspapers.

    Then when people get to the Apple store, they find it really hard to find those machines on the site and have to remove a bunch of shit to actually get that configuration.

    You know. Take a leaf out of Dull’s book.

  11. Steve Jobs recently said that the company’s first priority was to make the best computers and the second priority was to make a profit. While that’s very noble, shareholders expect profit to be the first priority…

  12. In many respects, installed base is overrated.

    I have the following Macs: Powerbook 5300cs, 2 SE/30’s, 1 Classic, 1 indigo ibook, 1 graphite ibook, 1 G4 Cube, 1 G4 iBook (Apple finally replaced my G3 iBook after three motherboards, two displays, three adapters, and three optical drives), a 333 Mhz Lime iMac and a 36-hours-old 20″ iMac G5.

    So for installed base we’re talking *ten * machines. Wowza!

    But installed base is mainly important in determining the market for software. So 4 of those 10 get crossed out immediately–they are pre-G3 machines that don’t figure into anyone’s estimations of a market for their software. Of the 6 that can run OS X, three are relatively slow G3 machines–the fastest of my G3 machines is the 466 MHz indigo iBook. Do any of these machines figure into anyone’s software market planning? Not likely–even Apple isn’t releasing stuff for slower G3’s. I wouldn’t be surprised if some or all of them don’t run Tiger.

    The Cube is in the middle–a 450 MHz G4 again is too slow for most of what even Apple is releasing these days, but it is my choice whether or not to keep it that way, since the processor could easily be upgraded up to modern specs. (Well, *relatively* easy–a brain change for Cube isn’t completely simple, but after upgrading memory and hard drive in an Rev. C iMac everything looks easy.)

    So we’re talking really three machines–out of ten–that would have any influence on making new software available.

    The problem with installed base is the numbers are too easy to play with–installed base of Macs at all, Macs *able* to run OS X, Macs running OS X, or Macs with relatively modern specs all are different numbers.

    By the way, I f-ing love the G5 iMac.

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