Loup Ventures’ Gene Munster and David Stokman believe the accelerating digital transformation will continue to drive Mac growth rates higher, and the segment will exceed investors’ expectations in 2022.
The reason for their optimism: a combination of work and learn from anywhere, the lesson learned due to the response to the COVID-19 pandemic, and a multi-year refresh cycle around the staged rollout of Apple Silicon across the Mac family.
Mac accounts for about 12% of Apple’s overall revenue and was essentially flat in the five years prior to the pandemic, up on average 1% annually.
MacDailyNews Take: Not the Mac’s fault. That was Apple management’s fault for ignoring it, saddling it with bad designs (Mac Pro trash can), and bad keyboards, among other issues.
Over the past three quarters, that trend has been reversed, and Mac growth has stepped up to the mid 20% range.
MacDailyNews Take: Yes, it seems that finally waking up and paying attention to the horse that brung ya pays dividends.
While the segment’s growth rate will decline from those highs due to rising comps, we believe the Mac will be a source of upside for the company in 2022 given our expectation of Mac growth of 5% in FY22 compared to the Street looking for 2%. For FY23 we expect 5% Mac growth compared to the Street at down 4%. The reason for our optimism: a combination of work and learn from anywhere and a multi-year refresh cycle around the staged rollout of Apple’s new M1 chip across the Mac family.
MacDailyNews Take: One slight note, it will be Apple Silicon across the Mac family, not just M1 varients. The M1 is just a starting point.
Looking forward, our FY21 Mac revenue growth estimate of 7% is in line with consensus. Beyond this year, we are more optimistic compared to consensus estimates and believe the Mac can grow 5% in both FY22 and FY23, compared to the Street at 2% and -4%, respectively…
Even with vaccinations and a return to greater normalcy in 2021 and beyond, we believe, long-term, 25% plus of knowledge workers will continue to work either part- or full-time remote, up from around 6% pre-pandemic. This is a revision upward from our fall 2020 estimate that 20% would be full or part-time remote. This shift is driven by greater employer comfort with remote work as productivity has remained acceptable over the past year, in part from a surge in remote workflow tools, along with video conferencing now viewed as a good alternative to many in-person meetings.
One impact of this sustained step-up in remote work is more tech outfitting for home offices. The additional ~10m full and part-time remote workers will need reliable computing hardware. While Apple products like the Mac cost on average 20% more than a comparable PC, the cost difference is justified given Macs are more reliable, require less hardware support, and tend to be more resistant to malware which can be a productivity drain. Today, the Mac has about 8% share (source: IDC) of the global desktop computing market, a figure that has been essentially flat for the past 15 years. We believe that will slowly change and expect Mac market share to inch higher in the years to come driven by the digital transformation, along with a time-tested trend: those who adopt Apple products typically remain lifelong customers…
On top of the accelerating digital transformation, the Mac tailwind will strengthen from a once-in-a-decade hardware refresh… On the company’s December quarter earnings call, Tim Cook said the M1 “gives us a new growth trajectory that we haven’t had in the past.” We agree and believe the Mac will continue to get a measurable boost over the next 2-3 years from its refreshed lineup, as it offers material speed and performance improvements over the previous Intel-based Macs.
MacDailyNews Take: No matter what, by now it should be clear: The Mac is indomitable.
(And Intel sucks.)