“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.
IBM does not participate in the low end of desktops at $800 and below either, so why not knock them?
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.
“Design snobs”?!
Bitch
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…
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.
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!
Opps, I ment, It Apple closed the doors for ever. Not every. See what ya zealots do. BA!
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.
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.
(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.
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.
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?
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.
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…
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.
Sorry Stevie, but you are wrong. An entry-level Mac is needed.
When someone chooses Windows over Mac because of price, that user is lost to the dark-side forever. Software is more expensive than hardware, so switching becomes an expense that few are willing to make.
Apple have a perfectly viable business regardless of their relative market share within the PC industry. This is obviously a difficult concept for some people to understand. Apple just need to make sure developers are getting enough out of supporting the Apple platform.
Besides, regardless of whos fault it is, Apple are still struggling to meet current demand with the imac and PM 2.5 G5 and ipod minis, so the idea that they could satisify anything larger than their current market share is wishful thinking.
I know of people who have cancelled orders or downgraded because of the unkown wait time. I ordered my 2.5Ghtz pretty much when they were first announced. I’m still waiting. Ridiculous really.
I am a share holder and I am honored to be part of a company that puts great design before making profits. The corporate entities are ransacking the planet in the name of profits.
SueLove.. the problem isn’t PEOPLE choosing PC’s it’s businesses choosing PC’s..
Macs aren’t really that expensive.. I mean..parts are parts.. no matter if you have an open architecture or what.. Dell doesn’t like you cracking open their pc’s either.. it voids the warranty..
the point is that businesses aren’t going for the mac and apple knows this. They ALSO know that that isn’t their market. If Halo2 comes out for WinXP.. does it matter how many banks are running some Windows variant?
Of course not. A games company will base future expectations for profit on past successes/failures.. for example.. even Adobe says a quarter of its photoshop sales are on the mac platform.. they’ll ignore the stupid marketshare figs.. as they should..
anyway.. we’re consumers here.. all we care about is the consumer marketshare.. which is pretty nice for apple (consider how much the iTMS downloads went up after Windows users were allowed in.. 20 fold? 30 fold? I think not.. the number went from about 1.5m/wk to about 2.5m/wk) can someone get clearer numbers on this? anyway.. if win is less than double.. well har har.. that means apple has a 40% share of consumer market..
lmao…
totally off, i know
Opinionated Jerk: That’s given me something to think about. I suppose there should be a relatively easy way to estimate an active recent installed user base by simply taking the number of machines sold (from Apple’s own quarterly figures) for say the last 30 months.
Some more recent machines will be deceased and some older machines will be going strong and still viable for some software sales, even if they would not include high end packages.
I think that gives us something like 8 million.
Doesn’t sound like a lot, but it’s enough that Adobe get over 30% of their revenue (IIRC) from them.
Nobody is talking about Adobe folding, but the iPod alone made more than all of Adobe’s products combined. (again, IIRC – can’t find the references now)
“Software is more expensive than hardware, so switching becomes an expense that few are willing to make.”
That depends on how much software they have.
Most PC consumers buy very little software. They use what came with the machine. Needless to say, they would like to be able to move their data across to the new machine, but most consumers don’t have a substantial investment in software.
I think this is a great article. This article is really stressing what mac users have been saying the past two years. It good to see that Apple has enough capital that some investers will forget the market share myth and focus on the company making products that are not only appealing but breaking thru with new technologies just like what mac users have been saying all along.
The times have finally changed!
There will be a new eMac today or if not todaqy then 26th. That is for sure. It will be a very cheap one. Remember that iMac prices went down quite nicely.
Don�t worry Steve knows what he is doing.
He will not lose this battle.
I am so plesed with him that I have been bying more and more AAPL for the last two years now. I will continue to do so because AAPL will go nicely over $150 if not this year then the next year.
Remember that xMas sales will fenomenal!
Road Warrior, glad to hear you’re an exception to the norm! With Apple at the moment we have uncompromising design AND high sales/soaring share price.
Something else to note in this whole market share discussion is that Apple’s notebook market share is several percentage points higher than its overall market share. And with the world moving from to portables, it follows that this should translate to a larger overall market share for Apple.
A lot of Mac fans spent a good number of years in the wilderness before Steve came back. It seemed like we would have to join the detested dark side – the usurper of Apple technologies – if the company went under. It looked like it would happen.
Compared to then, this is a golden era.
Steve came back, and has successfully turned Apple’s fortunes around. I think we have a right to be proud that we stuck to our guns now that Apple is once again the innovation powerhouse it deserves to be.
SICK: Kiss my arse motherfucker