“Mac is back,” Beth Snyder Bulik reports for Advertising Age. “Industry watchers are pleasantly surprised that it was Apple Computer’s design-inspired and user-friendly machine, not its small white music wonder, that bolstered the bottom line in the company’s just-reported fiscal third quarter. Apple shipped more than 1.3 million Macs in the U.S. for a 12% increase year-over-year. That puts it on the cusp of a 5% market share-the company’s biggest slice of the pie since 1998.”
“‘It’s not gigantic market share, but the momentum proves they’re doing something right,’ said David Daoud, analyst at IDC, who puts Mac’s share at 4.8%. ‘The numbers tell us the company is gaining traction.’ The rising numbers are important because Mac adds considerably more to Apple’s bottom line than iPod. And while 5% seems small, it’s not shabby in a highly fragmented market. According to Gartner’s latest U.S. data, leader Dell has a hefty 32% share, followed by HP with almost 19%, but the rest quickly dissolve into single digits: Gateway is at 6% and Lenovo has just under 4%,” Bulik reports.
“Analyst Tim Bajarin of Creative Strategies said ‘there is no question that Apple believes that the Mac as a platform is vital to its future.’ He added: ‘I think they’ll become even more aggressive in pushing the Mac as the center of digital living.’ If so, it’s got a ways to go. According to TNS Media Intelligence, Apple spent less than $7 million in measured media on Mac for the first 11 months of 2005, compared to some $57 million for iPod. Spending on Mac presumably has risen considerably this year with the new effort, though figures were not available,” Bulik reports.
Bulik reports, “The recent Mac success, of course, is still distant from its zenith in the ’80s. In 1986, for instance, Apple had a 16% market share and was the No. 2 seller of computers behind then-leader IBM. Even as late as 1990, Apple held a 10.7% share. Some optimistic analysts say Apple could once again reach a double-digit share in the U.S. computer market, but others believe modern market conditions will make that difficult, if not impossible.”
Full article here.
MacDailyNews Take: The phrase “modern market conditions” is meaningless. Nothing’s impossible (unless you only use Windows). Apple will confound the naysayers once again. More and more people will wake up to fast, fun, and secure personal computing with Macintosh. Only Apple Macs can run Mac OS X, Linux and Windows. Dominant market shares can be lost and gained virtually overnight. It’s happened before in many industries.
Related MacDailyNews articles:
Analyst: Apple selling more notebooks than Wall Street realizes – July 31, 2006
Apple brewing ‘Perfect Storm’ of Mac sales? – July 28, 2006
PC World writer’s advice for Microsoft: ‘Stop making crap’ – July 27, 2006
Microsoft about to lose the software business just as IBM lost the PC business in ‘80s – July 26, 2006
Survey shows big jump in consumer interest in buying Apple Mac; Dell takes steep slide – July 06, 2006
Dude, you got a Dell? What are you, stupid? Only Apple Macs run both Mac OS X and Windows! – April 05, 2006
justme2 said: “You mean the Gateway that opened its own stores… and failed miserably? We had a Gateway Country store not too far from us, and that place was DEAD.”
Thanks for helping me make my point! Gateway failed miserably, but Apple still lags far behind. Why?
Apple now has the second highest market capitalisation of any personal computer manufacturer after HP (IBM having left the field), with Dell languishing in third place a distant $8.25 billion back.
Within a few months, I wouldn’t be at all surprised to see Dell in fourth position behind Sony of all people.
Interestingly, Dell – a one-trick pony of a computer company – has no R&D and no entertainment strategy. HP has inkjet cartridges to boost its income, Apple has iPods, Sony has media content and PlayStation.
Poor little Michael Dell is dependent on the delivery of Vista to motivate new hardware sales and that simply isn’t a date that’s visible on the horizon. So – in a nutshell – if your sole business is being a partner to Microsoft, you’re on a hiding to nothing because your main job is to pay fealty to Steve Ballmer.
As a result, I don’t care very much even if Dell does sell more PCs in a day than Apple does in a year: it doesn’t have a reputation for innovation, quality, or service and it doesn’t make very much money doing so.
In their last reported quarter, Dell reported profits of $762 million on sales of $14.216 billion – a rate of a mere 5.36%. Apple, whose sales were only $4.37 billion – less than one-third of Dell’s – made a profit of $472 million (10.8%).
Put another way, Dell has to sell just over double the value of product that Apple does to generate the same profit, a problem which is exacerbated by Dell’s bargain-basement marketing and pricing. They probably have to sell six cheap PCs to generate the same profitability as two iMacs.
If I were Dell’s shareholders, I would be pressing very hard for a dividend from now on because this share is going south.
“Always better to gain traction than be in traction.”
– © 2006, Ampar.
“You can lead a horse to water, but if you can get him to lay down on his back and float in it, then you have something.”
– Joe E. Brown
PCs Rule: I wonder if you would prefer to invest in Gateway stock… Me, I’ll stick with AAPL. One company is a box assembler, impossible to differentiate from all the other box assemblers advertised in the back of PC magazines. The other company (Gee, I wonder which one…) actually developed a superior OS, creates innovative software, designs/builds award-winning hardware, leads the world in online music sales and, oh yeah… leads the world in the market for portable mp3 players. Who cares if Gateway pushes more boxes (with little, if any, profit margin) out the door. Underneath their holstein cow logo, they may as well be ‘built’ in my garage with off the shelf commodity parts and someone else’s OS. What a great reason for existing… No wonder they’re in the news all the time and discussed endlessly both in Mac and PC circles. Gateway, the next really smart stock purchase, at least if I accept PCs Rule’s line of reasoning… Wow! I learn something new every day.
Huh? and justme2 are both idiots, because they keep helping me make my point.
Gateway is a complete and utter failure in the PC market, but they sell millions of units more than Apple. Why?
Because the OS wars are over, and Apple lost.
Excuuuuuse me!! At least I didn’t stoop low enough to call you an idiot. Must be my bad back.
OS wars over?? Who’s the idiot? Let’s see, hmmm… Vista’s a roaring success (we are talking future here, not the past, get it??) There’s Linux, Unix, MacOS and others. Yes, Windows has the dominant (overwhelming to some extent) position, yet it does them little good on the innovative front. Doesn’t bode well for the future. All empires eventually fall (read your history.) Besides, Gateway ain’t the only ones selling last year’s OS – everyone else is selling it too. Doesn’t give them much to hang their hat on. Yes, they sell more units than Apple. BFD! What’s their market cap as a company? You ask “why?” Well, easy. They sell cheap clones. For now, it gets them more numbers (not profit, numbers.) What about later. Who will really care if their clone says Gateway, Dell, Aspire, Acer, el Crappo, or some other name? Fact is, Apple not only sells computers, but they also sell the OS. They also sell much more than simple boxes, thus… the value-added part of the equation. Doesn’t Ford sell more cars than BMW? Why? Go figure it out, Mr Dumas.
God, I hate it when it get’s reduced to name calling. But, if you really wanna go there, knock yourself out.
I can’t see any farther into the future than anyone else here, but I’d wage a very near and dear body part that the commercial version of “Vista” will not ship in the first half of 2007, even in its drastically eviscerated form. His Ballmerness is already bailing on the 2H of 2006 release of Vista business in his conversations with analysts and investors, so be sure to keep your MS stock on a VERY short leash this winter, MonkeySoftFanBoys.
There’s a hard wind ablowin’ into your future.
Six days and counting to see what the REAL future of computing will look like, Pee Cee suckers.
Start your Redmond photocopiers early!
The stupidity of PCs Rule and posters like it is extraordinary.
In the portable media space, Apple pretty much now competes against itself; the so-called No.2 in the market (SanDisk) is actually competing against the other WMA players from such notable competitors as Creative and iRiver. Of course, SanDisk and their fellow also-rans will shortly discover the joys of partnering with Microsoft when Zune comes in and starts taking their lunch money.
This condition has been created by developing a well-integrated cross-platform product that is designed for the benefit of the user, rather than the benefit of a software or hardware manufacturer or music store.
Creating a platform which supports multiple open formats (MP3, AAC) plus several quasi-proprietary formats (such as WAV, Audible and Apple Lossless) allows Apple to embrace both the past of digital audio content and its future. WMA licensees seem to believe that MP3 is a sufficient open standard to see them through until WMA ‘catches on’ which is seriously never going to happen.
Likewise in the PC marketplace, Apple has 100% of its marketplace – the market for MacOS-capable computers – whilst Dell, HP, Lenovo, Gateway and the other box-assemblers fight a never-ending battle (based on lowest price) for control of the 95% of the market that, for reasons passing understanding, clings to Windows as if it were the solution rather than the problem.
The biggest problem for these ‘Imagination not included’ suppliers of beige boxes is that Apple is now shipping boxes that can run their so-called partner’s operating system/virus as well as MacOS X. So now there’s another player in town with a more versatile, better mouse trap and the whole world seems to realise it helped by any number of positive reviews.
Seeing as we seem to be fixated on Gateway this evening, let’s be clear on how parlous the state of affairs is in the Land Of The Holstein.
Gateway/eMachines shipped 1.379 million CPU units in their last reported quarter and made a loss of $12.3 million after a $14 million extraordinary item relating to litigation wiped out a miniscule profit on sales of $1.078 billion, including non-identifiable sales of consumer electronics, software, warranties and the like. IDC’s figures suggest that Gateway has sold pretty much the same number of units this quarter, so one could reasonably expect a profit of between $5 and $20 million, but certainly no more than $50 million. Interestingly, the one identifiable thing we can state for certain is that – at 7.3% – Gateway’s gross margin is actually lower than Apple’s nett margin.
WIth a market cap of $595 million, Gateway’s shares have been becalmed for five years or more and the company is worth just over 1% of Apple’s value. If you want to get into the relative value of Gateway and Apple’s balance sheet, we can – but the only thing you’ll discover is that Gateway are living on borrowed time unless they can start to string together a series (by which I mean two or three years) of highly profitable quarters.
Mac OSX won the war in my house. Wasn’t even a contest.
Everything else is irrelevant – because I’m not a fanboy of anything or anybody.
BustingTheSkullsOfIdiots:
Thanks for a GREAT post dude!
Best not to argue with Bill Gates Junior – just call him out on the BS.
Ray Lane said: he bottom line is not market share, but units sold. If you were an investor, would you rather have Apple’s former high market share, or the actual number of Machines Apple now ships. My wallet says the latter.
Ray, I think you are confusing Market Share with Mind Share. Apple’s Mind Share – the number of people who purchase Macs – is already in the double digits. Low double digits. It’s Apple’s Market Share – the number of computers sold – is slightly under 5% in the US, a bit over half that in the rest of the world.
Apple’s stock holder would love to see either a) Market Share in the double digits or b) Market Share equal to Mind Share – either would be a significant improvement.
Note, though, that Apple’s share of the market is self-limited to the half costing over $500 per system – where the profit is. Not that long ago they were self-limiting to above the $1,000 price point. Is it possible that some of this growth is due to Apple’s invasion of this lower-priced, less profitable, market segment?
“Ray, I think you are confusing Market Share with Mind Share. Apple’s Mind Share – the number of people who purchase Macs – is already in the double digits. Low double digits. It’s Apple’s Market Share – the number of computers sold – is slightly under 5% in the US, a bit over half that in the rest of the world.”
What I mean is that right now in 2006. their market share may be lower than in 1986, but the number of units they are selling, and the amount of income they are generating is much better. Market share does not equal money, units sold does.
If I had a 90% market share of mud pies, which I sell for one penny each, it does not mean that people would rather invest with me than Apple. They will invest in Apple due to the amount of money and profits generated.
Look at the sales of the iPad. The day I bought my iMac they sold 4 others. I like the aesthetics of the apple and our family has caught on fast how to use it. Sure it is incompatible with some things but you can’t be everything to everyone anyhow…which has it’s advantages. Were getting by just fine. We plugged
it in and only had to download 2 software applications and that is it. The new 2010 iMac is genius. I was watching a show featuring the U.A.E. and all I saw were Macs. The time will come.