“More Apples are showing up on teachers’ desks and in classrooms,” Patrick Seitz reports for Investor’s Business Daily. “The Cupertino, Calif., computer maker has been aggressively working to reclaim its former ranking as the top supplier of PCs to schools and colleges.”
“Apple lost the education PC sales crown to Dell in 1999, according to market research firm IDC. But in the first quarter this year, Apple leapfrogged Dell in sales of notebook PCs to the U.S. education market, which includes K-12, colleges, universities and trade schools. It was No. 1 with market share of 36.5%, while Dell slipped to second with 27.1%. IDC plans to release second-quarter data Tuesday,” Seitz reports.
“Those education market figures don’t include Apple’s sales to students in the consumer market, where it is even stronger. Apple, like other computer vendors, is in the thick of the back-to-school selling season,” Seitz reports.
“‘What we’ve seen over the last couple of years is a significant increase in the number of students who own an Apple laptop or Apple desktop or plan to buy one,’ said Eric Weil, managing partner of Student Monitor, a market research firm that tracks spending by college students. In a spring survey of college students planning to buy notebook PCs this year, 43% said they were looking to get Apple laptops. It was far and away the No. 1 brand, with almost twice the response rate of No. 2 vendor Dell, which got 22%,” Seitz reports.
“Apple’s resurgent Mac business is beginning to chip away at the market share of rivals who sell machines running Microsoft’s Windows operating system,” Seitz reports. “The question Apple faces now is whether to lower prices to go after even more market share.”
Seitz reports, “Apple is widely expected to unveil a new line of notebook computers, likely with lower prices, in the coming weeks. ‘From an overall market perspective, there are a ton of Windows (PC) vendors that are quaking in their boots over if Apple decides to lower its prices,’ IDC analyst Richard Shim said.”
Full article here.
[Thanks to MacDailyNews Reader “Citymark” for the heads up.]
With annual growth already in the 30-50% range, price drops might push them to growth rates that would really strain Apple’s quality-control system. So while even faster growth would be great, I wonder if they’re ready for it.
What a great “problem” to have!
If you want to be a market leader then you’ve got to be able to handle the demand. I’m sure that they’ll do just fine.
Totally non-scientific but the “windoze” users I talk to still perceive the Macs as being way more than PCs and thus they justify their on-going annoyance with the PC as justified and tolerable.
As has been pointed out already, Apple’s quality has dropped with the increase in market share and the rapid pace of recent growth. Dropping prices to drive even faster market share growth and higher adoption rates could easily cause massive quality problems also.
There is no doubt that Apple will lower prices to go after more market share at a lower price point once the high end of the market is saturated or conquered, but is that time now? Nothing indicates that to me. Apple does not “own” the high end yet, and as long as Mac adoption-rates are as high as they are now, it’s hard to argue that the high-end market is already saturated (as the article implies.)
Furthermore, an across the board price drop even if limited just to the laptop segment, would incur much more of a drop in margins than Apple recently guided for. This article basically argues that *all* Macs will drop in price soon, based on no evidence at all really.
Apple might take this strategy if it thinks it can capture a huge part of the computer market in general,but that kind of wild gamble is not really Apple’s style. Once you lower your margins, there is no way back to the fat margins of earlier years. Throwing away a huge chunk of profitability on a gamble intended to increase market share in the middle of an economic depression doesn’t sound like a rational choice to me. Especially when by merely doing nothing new at all, Apple can bask in huge profits and hugely increased market share anyway.
This whole article seems predicated on the assumption that Apple is really focussed on market share (they are not), and that all these years they have just been waiting for that “power move” where they take over the lead from “front-runner” Microsoft. It’s a racing analogy that appeals to tech journalists of a certain type, but not necessarily anything that has been discussed around the table in the Apple boardroom.
Apple doesn’t lower it’s prices to entice buyers. It raises its feature set, quality, and user experience. That’s what sets Apple apart from the crowd. Apple patiently bets on the increasing intelligence of the populace for it’s growth and is thus able to make money when unit sales are down. It’s a game of mindshare not marketshare which is why Wall street will never understand.
Oh, yeah, and those mfg’s should be quaking in their boots!
The only so-called computer manufacturer who should be “quaking in their boots” is Apple.
There are only so many smug, pretentious people willing to pay exorbitant prices for proprietary computers that don’t play games and have no purpose in the enterprise. How many parents would willingly shell out so much money for such a useless machine? Not that many. All the enlightened kids I know are getting Gateway or Dell laptops running Vista. Buh-bye Apple.
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I do service and IT work for the Apple/Mac platform and I can’t see that the quality of the hardware or software has fallen a bit over the years.
I see a quite a bit of Lenovos and they are really Dollar Store junk.
I am with Jeremy – with one qualification – on this one. Apple cannot afford to ship junk, nor can it afford to allow its gross margins to sink much below 30% (the punishment from stockholders would be withering). I don’t foresee any broad reduction in Mac pricing.
That said – the exception – Apple has in the past done some pretty aggressive things in the education market. There have been education-market-only computers (eMac) and a lot of good deals. Education is a controllable channel, where Apple can set pricing pretty much independent of the other sales venues.
I could see Apple doing something interesting, especially in the laptop space, for education.
As educated consumers, we know that it’s the total cost of ownership that matters. What does it cost for security software and the time to constantly battle the viruses and worms that plague Windows ?
As Mac users tell you ” It just works ! “. And it does.
@Jeremy
“As has been pointed out already, Apple’s quality has dropped with the increase…”
You must be a blogger paid by Micro$oft. Nothing you say makes any sense. You must be a Jeremy posner. Go troll somewhere else.
MW-look as in look what I’ve found!
Sorry about my post. Someone spiked my Tang™ with an anti-truth serum.
“All the enlightened kids I know are getting Gateway or Dell laptops running Vista.”
That’s going to be one scary ass sleep over.
AAPL is creeping back to $165-170 range as of Friday 8/8. What a opportune time to invest and even most analysts forecasting that Apple shares will reach $230-250 range soon. However, the concerns about over extending are real but it is only in the short term.
Make a 10-20% price cut and you’ll sell twice as much = rising benefits and a monster plague for PC assemblers!
Apple’s elasticity of price on their computers does not justify a dramatic price drop to grab market share. What they would give up in margin in exchange for market share is economically unjustified. The attendant change in production, etc., to feed into the newfound demand would be at odds with the existing corporate structure, manufacturing model, distribution model, etc. A fool’s errand.
Apple will adjust their prices only minimally, and continue to target only higher end segments that deliver superior margins and let Dell et al chase after the lower rung shit. They do not want to pay for quality and Apple does not want them as customers. Both sides win.
Apples margins are destine to fall because of the margin contraction coming from the introduction of the iPhone Nano slated for next year. This will reduce margins substantially from the 50% or so (gross margins, that is) they currently get from the iPhone they sell.
Learn.
A higher percentage of Apples revenue will come from iPhones. A lower gross margin will result from introduction of the iPhone Nano, bringing down gross margin levels from 33% to probably 31%. That is why they will drop, NOT because Apple will go after the shit bottom 25% or so of the market that only drags down their margins, ruins their corporate culture, and screws up their processes and profits.
Remember what I have said here.
I have 2 MacBooks, 2 IMacs and had a problem with the 24″ which necessitated adding some code to the Terminal whilst talking to a second level tech person in Austin…this was not a machine problem but a software problem. The battery on the first MacBook gets down to about 15% and it may quit, problem solved by plugging it in. As I am wearing T-shirts with System 7 or OS 8 on them you can guess how many Macs I’ve had, As a user for twenty years, my experience is there is no quality problem worth mentioning and if there is Apple will fix it.
As for increasing volume causing quality problems, all the brands are using mainly Chinese, Taiwanese, assemblers, and the components sometimes give problems. For everybody, including Apple. I’m sure Apple oould take over Dell’s or HP’s market share and the same manufacturers would be involved, with quality no worse and probably better than before.
Jeremy, x, posner: you keep making the same writing mistakes.
If you want to be a market leader then you’ve got to be able to handle the demand. I’m sure that they’ll do just fine.
Have we already forgotten about MobileME and the iPhone 3G rollout?
From a cloner’s perspective, I’d be much more concerned about the worsening crapware from Redmond than any price cuts from Apple. What good are prices when you’re at the mercy of a sales-killing OS?
Slow and steady growth has been Apple’s mantra for the past 10 years. Why break that now?
Macs are priced pretty well right now. Sure, we’d all like to spend a bit less, but I’d hate to see Apple duke it out with the Bottom-Feeder Pee Sea BoxStuffers™ trying to reel in the WalMart crowd. The last thing we need is for Apple’s historically high quality to start slipping, if it already hasn’t started to.
As a start Apple needs to beef up the Mac mini by adding a real graphics card. Or just make a hybrid Mac mini/TV.
And to start playing that old saw…
I’d love to see a mid-range MacPro-level tower. Half-a-MacPro. Half the slots, half the size at around half the price. The MacPro is just too damn big for me OR to live comfortably under my desk, barring multiple amputations, of course. I’d love that kind of power in a reasonable size.
I’d especially like to be able to choose a FAST and BEEFY graphics card for my VectorWorks, 3D and Photoshop work. Neither the iMac, nor my MacBook Pro really cut it in that area.
This would draw MANY new Mac users (even some PC gamers) who rightly see the headless Mac desktop lineup as extremely limited with that one HUGE, GAPING hole between the Mac mini and the MacPro!
I KNOW I’m not alone in this. What’s it gonna take, Apple?
I think that Apple now has some serious buying power and can get very low component prices.
Every year Apple makes over 90 million devices, so they have some power.
They wont drop prices much, but with prices dropping slightly and inflation always happening, the result is that Apple computers, indeed all computers are cheaper every year.
Of course, the machines will have more power, more facility than before.
And they are Apple computers – WAY better quality, better build etc. etc.
I dont thnk we will see any big changes until Apple reach 10 – 12% market share.
Then they have some challenges, maybe…. but they dont usually make stupid mistakes, do they?
might be largest seller of hardware by percentage (Apple, that is) but is does not matter. It’s the OS, stupid! And sadly, Apple is not yet in the majority there. However, at the University my daughter attends, the tech dept and the school itself are heavily MS centric, but when u see what goes into the student’s rooms on move-in day, it has become more and more evident that Apple is making inroads. I have seen the shift from hardly any Mac boxes on move in day to a noticeably increased presence over the course of the last 3 years. ( Still 2 more to go, ka-ching)
If Apple dropped their prices by $100 for the MacBooks then they could spur an increase in market share without completely compromising their profit margin. As their order volume to the manufacturers their component cost will go down too.
Apple do need to be careful of not dropping their prices so much that they fall into the trap of using cheap and unreliable components. Going purely for market share will end them up in the same mess that Compaq and Dell landed in.
Product reliability is very important to Apple. I have a friend who works in their QC dept and I can tell you there is incredible attention paid to product failure trends.
For those who like me used Macs in the Mac OS 7-9 days should still remember the near daily restarts or crashes. Software instability was a big problem then. There were still hardware issues too. Macs are so more stable now than then.
“What does it cost for security software and the time to constantly battle the viruses and worms that plague Windows ?”
$29 a year and 10 minutes of your time, once. That’s why only Apple fanboys care about the viruses that supposedly “plague” windows.
“As a user for twenty years, my experience is there is no quality problem worth mentioning “
That’s typical for a fanboy. You seem to have at least one severe ongoing issue, but it’s “not worth mentioning”. Unfortunately the mass market has higher expectations.
“That’s why only Apple fanboys care about the viruses that supposedly “plague” windows.”
That’s typical for a Microsoft astroturfer.
And the astroturfers are out in force.
That must be where the money to promote Vista is going. So far, it looks like money well spent. These guys are scary brilliant.