“Apple, which has outpaced the overall personal computer market this year despite its strategy of eschewing discounts, showed its first signs of weakness in November,” Yukari Iwatani Kane and Justin Scheck report for The Wall Street Journal.
“Sales of Macs in U.S. stores last month declined 1% from a year ago, while industry-wide PC sales rose 2%, according to research firm NPD Group Inc., which tracks retail sales,” Kane and Scheck report.
“NPD analyst Steve Baker blamed a 35% drop in sales of desktop Macs, noting growth in Apple’s laptops still outpaced rivals,” Kane and Scheck report.
MacDailyNews Take: Nowhere in the article do the reporters bother to report on what any rational observer would consider the salient bit of information: People are now buying more notebooks than desktops. This we just happen to know, no thanks to Kane and Scheck. It would be nice to know exactly what NPD thinks what the split is, but the most important point is this: Apple’s MacBook family is kicking ass and taking names. We had to go to Reuters to find out that NPD says “Apple’s notebook sales, however, were up 22 percent in November, while Windows sales rose 15 percent. Windows desktops sales [fell] 15 percent and Macs [were] down 38 percent [in November]. 38% or 35%, which is it guys?
Kane and Scheck continue, “Until last month, Apple’s premium-pricing strategy seemed to be paying off, as the company boosted profit and gained market share from Windows-based PC rivals like Hewlett-Packard Co. and Dell Inc. at a steady rate. In October, for example, Apple shipments grew 28% from a year earlier-four times the growth rate of the overall market, according to NPD.”
MacDailyNews Take: If more people today are buying notebooks than desktops today (trends, if not reporters, indicate that they are) and Apple’s notebook sales are up 22% in November, then their premium-pricing strategy is still paying off. And, oh, by the way, there were five fewer holiday shopping days this November than last.
There are three kinds of lies – lies, damn lies, and statistics. – Benjamin Disraeli
Kane and Scheck continue, “Apple Chief Executive Steve Jobs told analysts in October the company wasn’t cutting prices on Macs, which make up 46% of the company’s revenue, because ‘we’re not tremendously worried’ the downturn will drive customers to cheaper PCs.”
“Apple has steered away from the low-margin netbook market in favor of higher-end computers. “We don’t know how to make a $500 computer that’s not a piece of junk,” Mr. Jobs said in October when the company reported earnings,” Kane and Scheck. “Apple rivals like H-P and Dell offered discounts weeks earlier than usual this holiday season, dropping some prices by as much as 50%. Mr. Munster said since last December, the average Windows PC price is down 35% to 45%; in contrast, Apple has offered only modest discounts of 5% to 10% on its PCs, analysts said.”
MacDailyNews Take: Again, you won’t get this from the mainstream tech media, but read between the lines: Dell and HP have slashed prices to remain flat (+2%) in November. Apple has kept prices (and margins) in line to remain flat (-1%) in overall unit sales in November YOY. That is the real story. The real story that will be mischaracterized in reports all day today and beyond and that will likely negatively affect Apple’s stock price.
Kane and Scheck continue, “The strategy translates to a big bite into consumers’ wallets. On Amazon.com last week, an H-P Pavilion laptop with a 14.1-inch screen was marked down from $1,074 to $760. In contrast, an Apple MacBook with a 13.3-inch screen, less memory and less storage capacity was $966, just $33 below its list price.”
MacDailyNews Take: The real headline: “Apple’s notebook sales growth outpaces Windows PCs’ even as Apple holds the line on pricing while desperate Windows PC Box assemblers slash prices.”
Kane and Scheck continue, closing their article with, “Piper Jaffray [analyst Gene Munster] said he expects the company to recover in coming months, and said he is maintaining his prediction that Apple next year will increase shipments by 10%, while the rest of the industry falls 5%. Shaw Wu, an analyst at Kaufman Brothers, expects Apple to sell 2.7 million computers in the current quarter ending in late December, a 17% increase from a year ago. He expects industry-wide PC shipments this quarter to be about 85 million. Despite short-term weakness, analysts expect Apple’s products to remain more profitable than many rivals’ computers. The MacBooks are forecast to deliver close to 20% profit margins, compared with 6% or less for competitors, said Toni Sacconaghi, an analyst at Sanford Bernstein & Co.”
MacDailyNews Take: Way to bury the lede, guys, you hacks. One more time: Apple’s high margin notebook sales are up 22% over last November – in the current economy, no less.
Full piece here.
MacDailyNews Take: We wonder why The Wall Street Journal’s article is written in such a way. If you do, too, perhaps the hatchet men, er… “reporters” can help us all with the answer:
In closing, if Apple wants to sell more desktops – meaning, if the desktop market is worth pursuing anymore – then Apple should consider offering a mid-sized tower Mac. If not, so be it. There’s no sense making a product for a market that doesn’t meaningfully exist (Cube). If notebooks are the future, and all indications are that people are strongly going portable, then Apple is doing very, very well: increasing notebook sales and maintaining strong margins all in a tough economy.
Good thing that Mac users don’t decide based on stupid analyst. They can say what ever they want and get paid by Microsoft or who ever they want, we will always know the true.
If things are going so well for the PC guys, why is Dell asking employees to take voluntary leaves of absence to avoid layoffs ? So, who is making money making and selling computers ? We know Apple is. When the smoke clears, we’ll see who has a better business model.
Personally, I think the Cube didn’t succeed primarily because it was a little underpowered and overpriced, for what it was.
I’d buy a midsize tower in a heartbeat. I really would like the upgradeability afforded by a tower without resorting to a Mac Pro.
“…if the desktop market is worth pursuing anymore – then Apple should consider offering a mid-sized tower Mac. If not, so be it. There’s no sense making a product for a market that doesn’t meaningfully exist (Cube).”
The perfect form factor was the IIcx/ci. Three expansion slots, ultra-easy access, separate monitor, lots of ports, cheap to make yet reliable, very upgradable, easy to service, great for home/work/education.
One of these babies with connection to the new 24″ monitor would be excellent.
The reason that desktop sales are down is due to not being updated. The mini has not been updated for nearly 1.5 years and the iMac line is so dated which should of been updated in November.
Heard at HP and Dell offices……
“You know, this season, we can drop our prices below costs and keep our sales high. That will teach that Apple company…..”
Lets see. Sell below cost = lose money. Sounds like a great way to close the company and give nothing back to the shareholders….. LOL
Just a thought.
Though I usually agree with the MDN takes, this time MDN is overreaching. The ledes are YOY sales growth and, to a lesser extent, market share. Until now, Apple has seemed to levitate over the recession with continued overall sales growth. If Apple sales growth has stopped, that IS the big news. More nuanced issues, such as differences between notebook and desktop sales, or Apple’s tardiness in updating its desktop line, should be mentioned but can’t be the lede. This is fair news coverage.
Hey, sinclap . . .
Are you back? Wow. Anyway, loathe to point this out, but you (still) really need to clean up your writing skills. “Should of” ≠ “Should HAVE.” And “…is so dated” implies a THAT clause to follow, such as “the iMac line is so dated THAT no one is buying until a refresh comes along.”
Some possible reasons why desktop sales are down:
The Mac Pros are due for an update soon with Nahalem Xeons.
Mac Minis haven’t been updated in ages and should be updated soon.
MacWorld Expo is just a few more weeks away.
Overall, consumers are purchasing laptops more than desktops.
But MDN is avoiding the real news in the article:
Domestic Mac shipments were down 1% year-over-year in November even as industry-wide PC sales rose 2%.
Apple needs to have a wider range of desktops.
Apple needs a sub-12 inch netbook.
In every industry it is now “last man standing” mode. Whoever can stay in business through this financial downturn wins.
It is a good thing Apple has $50 billion in cash. (Or does it? How much was invested in the stock market and lost half its value?)
Can you say, “Options Expiration”? I knew you could.
“The reason that desktop sales are down is due to not being updated. The mini has not been updated for nearly 1.5 years and the iMac line is so dated which should of been updated in November.”
Actually, the iMac is right inline with it’s average update cycle. It was last updated on April 28th, 2008 (6 1/2 months ago.) The average update cycle is 232 which would mean an update is due around Feb 2009.
^^^^ 232 days that is.
^^^^ Neveermind, my math is off, you’re right..
Not enough coffee yet..
What gets me is they report net books as computer sales and do not report iPhones and iPod Touches as computer sales.
The iPhone/iPod Touch is a much more powerful and capable computer than a net book.
Adding iPhones/iPod Touches would double Apple’s totals and subtracting PCs net book totals would really lower the PC numbers.
First cash registers, now net books. Will the madness never end?