Apple Claims 91% of $1,000+ PC Market Revenue in June

[Vyriss]

That would be true if Apple was a software company like Microsoft. Apple is a hardware company that makes nearly all it's money from hardware. OS X, iLife, Final Cut etc. is there as an incentive to buy Apple hardware, hence why Apple software is so ridiculously cheap, since it is subsidised by the hardware.

Apple is both a software company and a hardware company, just as Microsoft is. While each company's main focus may lie in one or the other, there's no denying the fact that both Microsoft and Apple produce both.

I think that was his point. When people look at PC margins they include the cost of a Windows license. When people look at Mac margins, they do not account for OS X.

That's because a margin, by definition, is simply net profit as a percentage of revenue. When calculating the net margin for PC's, there are two companies to take into account. Apple produces both OS X and the hardware, so there's no logical reason to discern between the hardware and software.

 

[-hh]

No, he's asking you what your definition of high end is.

And Shiner has persisted in remaining non-commitally vague.

It appears to me that all that all Shiner is interested in are the hardware specifications of a bag of parts, and that all other differences are assumed to not exist, or not be significant.

Thus, his likely position would be that (for example) the iMac compares poorly to a traditional "beige box" desktop PC, because it has lower performance at a higher retail purchase price.

However, this is only looking at initial purchase costs, not lifecycle costs.

That same iMac happens to also be a more energy-efficient system because of that "lower performance" portable CPU: at $0.15/kWh, it typically costs roughly $250/year less electricity to operate than the generic desktop PC, which means if that 'better' PC cost $1000, the iMac will have a time-until payback (comparative break-even) at a mere 2 years, whereupon it then becomes the less expensive system.

For a $750 Desktop PC, the iMac break-even is similarly at 3 years.


Another likely example would be to compare an i7 based PC to the Mac Pro. The fallacy here is that it is ignoring the law of diminishing returns: technology-limited incremental improvements in overall performance simply do not scale linearly. Of course if they did scale linearly, then forget this talk about mere computers! I'd drop $50K for my next car, since this would mean that it would go 280mph, carry 8 people and get 55 mpg.

I would add in quality control, industrial design, customer support, and integration across product.

...and I'd in other factors that are nominally orthogonal to the interests of tecchies, such as the lifecycle cost contribution of power consumption, as was mentioned above.

What makes the cost-value paradigm difficult for many people with Apple is that it is hard to quantify what I'll call a "good feeling". Goodness obviously has a value, but the dillemma is in how to try to quantify it, as well as what constitutes "goodness".

Two major areas of goodness that Apple seems to be valued for are IMO:

1) the generalized peace of mind of not having to be paranoid about potential malware

2) a holistic UI / low hassle quotient "experience" of user interaction. Often called "it just works" (or similar statements) it is a generalized ease-of-use which in theory translates into higher productivity and utilization rates.

Very simplistically, we can say that this sums to the value of the OS ... which some of it is ... but what's not necessarily as evident is the potential contribution to this as well from the hardware's industrial design. In any event, since this predominantly UI-based "goodness" also means that this would similarly be a lifecycle-like cost/value paradigm, not necessarily just an initial purchase price snapshot, so how does one then try to translate that down to the portion that is the 'upfront cost' present value calculation equivalent?

I'm not suggesting that I have the answer, but merely pointing out that with a product as complicated as a computer, the value paradigms of "fit" are complex, non-trivial and is more likely to have dimensions to it that are prone to being overlooked.


-hh

 

[gilkisson]

Conclusion: The only thing that dictates "High-End" is a price-tag.

Beauty, like value, is in the eye of the beholder. I perceive my Macs to be of high enough value, to me, to justify the price.

I can (and have, ad nauseum) built PCs of various specs, and loaded Windows or some flavor of Linux on them. I built them for specific purposes:

-- Low-end XP-running PCs for low-end grunt work, basically glorified terminals.
-- Higher-end XP-runners, to do the same thing as the grunts, but with ability to crunch some spreadsheets. Paid more, got more (disk, RAM, speed).
-- Screaming gamer machines. Paid quite a bit, got the specs I specifically demanded for that application. Approaching Mac prices now.
-- Linux servers, to run Sendmail and Apache. Can't beat it, and I have no need for an Xserve to do this.

For me, personally, it's been my MacBook, soon to be replaced with my new MBP. I paid dearly for it, because it what *I* wanted, based upon *my* perception of the value.

I could have about any laptop I want -- I choose Mac.

 

[deconstruct60]

Except for Mac Pro's all of Apple's computers are essentially the same laptop with the only difference being the screen, graphics and CPU. right now laptop parts command a higher price which is why Apple computers cost more.

Milling cases out of solid aluminium blocks is expensive too. Some of it is differences in the physical cases and not as much between the electronic components.

in time the prices will fall and others will start making competing products that are a lot cheaper. For now the closest competitor is one Dell model that costs about the same.

Prices on laptops have already fallen below the $1000 mark. It isn't that they are one day get down there.... they already are.

Some of that is how many generations what to leave on the market in different packages.

Especially with Larabee on the way from Intel. Supposedly the new instructions will let you run GPU quality graphics from the CPU

Not Larabee. That is a GPU that is based upon the mainstream CPU design with some extra GPU oriented instructions. Your applications will not run on those CPU cores. The graphics work will be dispatched to them as now. If your app has 'worker threads" that can be invoked on a GPGPU some of the work can be done on the GPU if it isn't doing graphics work. However, unless that work is factored out and can run separately will low communication costs it isn't going to make the apps you currently own go faster.

The same tech trends that makes Larabee possible though will make CPUs and other graphics cores cheaper too.

In a whole computer with acceptable performance can be shrunk down to 3 chips and a small fan then the software and the packaging is going to be the primary dominating costs. If the "computer" becomes $80 in parts then even the low end vendors will be able to spend $100-300 on the stylish package (even easier to do because it is smaller) and still hit price points far below what Apple is selling at currently.

 

[Electrolytic]

wow Apple has 91% of crumb (premium market).. Here's the truth: "Apple still only has 8.9% of the total market. Big deal...

 

[Shiner]

And Shiner has persisted in remaining non-commitally vague.

It appears to me that all that all Shiner is interested in are the hardware specifications of a bag of parts, and that all other differences are assumed to not exist, or not be significant.

Thus, his likely position would be that (for example) the iMac compares poorly to a traditional "beige box" desktop PC, because it has lower performance at a higher retail purchase price.

However, this is only looking at initial purchase costs, not lifecycle costs.

That same iMac happens to also be a more energy-efficient system because of that "lower performance" portable CPU: at $0.15/kWh, it typically costs roughly $250/year less electricity to operate than the generic desktop PC, which means if that 'better' PC cost $1000, the iMac will have a time-until payback (comparative break-even) at a mere 2 years, whereupon it then becomes the less expensive system.

For a $750 Desktop PC, the iMac break-even is similarly at 3 years.


Another likely example would be to compare an i7 based PC to the Mac Pro. The fallacy here is that it is ignoring the law of diminishing returns: technology-limited incremental improvements in overall performance simply do not scale linearly. Of course if they did scale linearly, then forget this talk about mere computers! I'd drop $50K for my next car, since this would mean that it would go 280mph, carry 8 people and get 55 mpg.


-hh

Ok here we go. It is not hard.

High-end to me means high-end parts. Top of the line parts demand top of the line prices. To you mac zealots, high-end means high-cost. To each their own. The internal parts of a mac are the same as a PC. The only difference is the case and the OS and the marketing, which by the way is amazing.

Please skip the lame argument about power consumption. Apple doesn't make their computers with laptop parts to save the world or energy. They do it for form over function, plane and simple. It is also cheaper for them to use the same parts across all platforms.

Compare the i7 desktops to the imac line. That is the proper comparison. Then you see the huge hardware gap between apple and PC makers. As I have stated many times now the MacPro is a workstation not a desktop.

 

[Maserati7200]

This just in......Bugatti has claimed 100% of the market in the category "cars costing over 1,000,000$ dollars."

Actually thats not true. There are quite a few others that cost over $1M

 

[JGowan]

I love Apple, but i don't know how they can hope to continue being successful without addressing the lower end market more.

Perhaps you missed one of yesterday's big headlines here on Macrumors"

"Apple Reports $1.23 Billion Profit for Q3 2009, Best Non-Holiday Quarter Ever"

What's to know?

 

[gilkisson]

Ok here we go. It is not hard.

High-end to me means high-end parts. Top of the line parts demand top of the line prices. To you mac zealots, high-end means high-cost. To each their own. The internal parts of a mac are the same as a PC. The only difference is the case and the OS and the marketing, which by the way is amazing.

Fair enough, but so far all I hear in an opinion. Do you have a specific model laptop which is => any MBP? Something you personally would prefer to own, use, and recommend, over the MBP? Make, model, and price would suffice

Please skip the lame argument about power consumption. Apple doesn't make their computers with laptop parts to save the world or energy. They do it for form over function plane and simple. It is also cheaper for them to use the same parts across all platforms.

What "laptop parts" go into what Mac-which-is-not-a-laptop, please? I do hope you are not talking about the Mini...

Compare the i7 desktops to the imac line. That is the proper comparison. Then you see the huge hardware gap between apple and PC makers. As I have stated many times now the MacPro is a workstation not a desktop.

Why is i7-to-iMac the only "proper" comparison?

Compared to a PC desktop, yes, the MacPro is a workstation. But it's a desktop, a very high performance desktop.

 

[BaldiMac]

Ok here we go. It is not hard.

High-end to me means high-end parts. Top of the line parts demand top of the line prices.

Good start.

To you mac zealots, high-end means high-cost. To each their own.

Insult anyone that disagrees with you. You are losing steam.

The internal parts of a mac are the same as a PC. The only difference is the case and the OS and the marketing, which by the way is amazing.

If the internal parts are the same, and the Mac has a better case, doesn't that make the Mac higher end than the PC by your definition based on hardware alone?

Please skip the lame argument about power consumption. Apple doesn't make their computers with laptop parts to save the world or energy. They do it for form over function, plane and simple. It is also cheaper for them to use the same parts across all platforms.

Smaller, quieter, greener laptops sound a lot like function to me.

 

[AidenShaw]

Kernel Potter would call that "horse hockey"

That same iMac happens to also be a more energy-efficient system because of that "lower performance" portable CPU: at $0.15/kWh, it typically costs roughly $250/year less electricity to operate than the generic desktop PC, which means if that 'better' PC cost $1000, the iMac will have a time-until payback (comparative break-even) at a mere 2 years, whereupon it then becomes the less expensive system.

For a $750 Desktop PC, the iMac break-even is similarly at 3 years.

How do you figure that the Imac uses 190 watts less than the mini-tower - assuming that both are on 24x7?

How do you account for sleep and low power states where the systems spend much of their time? (My recording watt-meter shows that my Q6600 system with 6 disk drives spends most of its time at 100w to 120w.)

Your power savings figures are utter nonsense.

 

[Vyriss]

Fair enough, but so far all I hear in an opinion. Do you have a specific model laptop which is => any MBP? Something you personally would prefer to own, use, and recommend, over the MBP? Make, model, and price would suffice

HP dv7t.

What "laptop parts" go into what Mac-which-is-not-a-laptop, please? I do hope you are not talking about the Mini...

The iMac.

 

[BaldiMac]

wow Apple has 91% of crumb (premium market).. Here's the truth: "Apple still only has 8.9% of the total market. Big deal...

$3.3 billion in quarterly revenue is not a big deal to you???!

 

[Droid13]

Wow

Guys, why all the fuss? I do not understand why this thread has become so heated...

People buy the personal computer they want/need/can afford and base the decision on what to buy on any number of things, such as the finish of the case, software availability, graphics options, power consumption, noise, pricing, user experience, product support... the list goes on and on - and things are weighted differently from person to person.

"High-end", "Overpriced", "Bargain", "Trash" - they mean different things to different people under different circumstances.

It's all very subjective.

 

[GeekGirl*]

Who is going to spend more then 1K on a windows machine?LOL

 

[Vyriss]

$3.3 billion in quarterly revenue is not a big deal to you???!

It should be. Calls for doom for both Apple and Microsoft are LARGELY overstated. Companies bringing in $billions in profit each year aren't going to just go *poof* (Despite some rabid fanboy's wishes). Both will adapt and survive.

 

[deconstruct60]

That would be true if Apple was a software company like Microsoft. Apple is a hardware company that makes nearly all it's money from hardware. OS X, iLife, Final Cut etc. is there as an incentive to buy Apple hardware, hence why Apple software is so ridiculously cheap, since it is subsidised by the hardware.

Apple is not purely a hardware company.

In the Mac space they are an integrated system company. The whole system being used by the user. That is suppose to be one of the primary value adds, extremely puzzling why folks keep presenting that isn't the case when trying to be an advocate for the company.

Mac OS X pays for itself. Watch (or go back in time ) the quarterly report for a quarter when a major Mac OS X update shipped and there was a large buy of Mac OS X updates. The profit margin ticks upwards, not downwards.

Similarly look at the balance sheet. Apple has $6+ billion in deferred revenue this quarter. You think that is for shipped hardware that isn't being used by users?? In fact there is little Mac OS X hardware there in those categories ( See "Schedule of Deferred Revenue").
http://www.apple.com/pr/library/2009/07/21results.html

Largely, that is money Apple gets to wink-into top line revenues every when they ship updates. iPhone OS upgrades ship and bing! Apple slides some higher than average profit margins into the balance sheet.




iLife in particular

iPhoto ( Aperture lite )
iMovie ( Final Cut lite )
Garage Band ( logic lite )
iWeb ( there is not "save as web" in iWork )
iDVD ( likewise no "save as " in the pro video tools )

one of the few apps that doesn't have a "pro" sibling from which leverage code and/or revenue support for is

iTunes

However, yeah that one has hardware tying implicit and probably does pay. However, that is tacked on iPods sold not Macs since the most widest distribution of that program is on Windows.

Likewise Safari ( let's discount the huge chunk of free open source leverage to bring this to market.) again incremental costs spread over all OS X platforms ( Mac OS X and iPhone OS).


Ooops, OK i forgot Mail. Ok. Mac OS X isn't profitable because Apple is shipping a free mail program. Seriously?

You'd probably be right. If Apple persistent trying to be a 1-2% market share vendor then Mac OS X will a boat load of free apps might be a problem.

You'll note though that Apple has incrementally added these apps over time and as mac volume grew.

At this point though, Apple is sellling over 2 million Mac per quarter.
Even at $50 a pop. That is a $100 million per quarter. 4 quarters that is $400 million. Apple's yearly R&D budget is around 1.2 Billion. That is about 1/3 Apples R&D budget right there. You don't think Mac OS X costs aren't covered? Still haven't counted any update revenues nor Mac OS X server revenues which is way higher than $50 a pop. Nor have counted the $4-5 a pop can easily skim out of iPhone OS for core OS X development.


Adobe sells Photoshop Elements substantially cheaper than Photoshop buy just stripping functionality out of the higher priced version. There is a sum development there in making it smaller but that is dramatically cheaper development than in creating Photoshop in the first place.

The profit margin on Mac OS X goes up as Apple ships more Macs year over year.

Selling software is very profitable if you sell millions of units unless you do some very dubious things. Can even put limited utility free versions out there and still make boatloads of money.

That is the reason why Microsoft can throw several "free" programs into the Windows bundle. The margins are huge. To some extent Apple has to "keep up with the Joneses" with Windows with "free" programs. To do that you need volume so that can amortize those costs over a increasing higher number of users.

 

[-hh]

Ok here we go. It is not hard.

High-end to me means high-end parts. Top of the line parts demand top of the line prices.

That's a start, at least. Now what do you say constitutes a "top of the line" part by definition?

Is it processing performance? Or is it reliability? Or is it stability? Or is it operating temperature/humidity range(s)? Or is it operating lifespan? Or something else?

To you mac zealots, high-end means high-cost.

Reminder: Namecalling is a TOS violation.

The internal parts of a mac are the same as a PC.

Except when they're not.

How often does that then apply? Well, currently, it is arguably 100% of Apple's desktop line, since the typical desktop PC doesn't use laptop CPUs, HDDs, etc.

The only difference is the case and the OS and the marketing, which by the way is amazing.

Which if you don't care about, you place zero value upon.

However, do keep in mind that at the end of the day, value is predicated upon actual productivity, not if the CPU inside the box says 2.5Gz or 3GHz. As such, factors such as battery life on laptops cannot be simplistically overlooked.

Please skip the lame argument about power consumption. Apple doesn't make their computers with laptop parts to save the world or energy.

Sorry, but the lower power consumption is still a fact with the iMac, and even if you don't care about how much power you're burning, the cost numbers simply do not lie, so it contributes to the product's lifecycle cost.

Futhermore, Apple most certainly includes "Green" in their corporate strategy. See:
http://www.apple.com/environment/energyefficiency/

They do it for form over function, plane and simple...

Actually, the old designer saying is that Form Follows Function.

While I do agree to a point that there are "fashion"-like design elements to Apple's products, their form nevertheless often makes them a pleasure to use, which consistently results in higher productivity and utilization, which equals a higher value despite lacking "high end" (higher power) hardware components.

Paradigm challenge: look at the history of Le Mans, the 908 and the "Index of Performance": how is it that the 908 team was able to actually beat others that were running with 2x - 3x more horsepower?

Compare the i7 desktops to the imac line. That is the proper comparison.

Sorry, but the i7 is roughly $1000 more expensive to operate over its lifecycle, so the question becomes one of if the higher performance of the i7 results in more than $1000's worth of productivity gains...."all other factors being equal". For non-demanding tasks ... Internet, Email, etc...the answer is a big fat FAIL: the i7 is overkill for the intended application, so all you're doing is wasting power & money.

FWIW, I don't dispute that one can buy a more powerful desktop PC for less than a typical comparable desktop Mac...and that's great if your hobby is that you're a PC GameBoy looking to max out framerates in the latest First Person Shooter. However, as far as I'm concerned, that doesn't fall into computing, but instead falls into the "Entertainment" expense category. There's raw power, and then there's agility which contributes to your overall index of performance and success/failure.



-hh

 

[HyperZboy]

Check Made out to Apple, Inc. still uncashed...

While I agree this is good news for Apple's profit margins, it's bad for some people wanting to buy a Mac, especially in a bad economy and especially for some potential PC switchers.

I'm still waiting for that somewhere around $1500 range mythical mid-range Mac tower.
A check is written and waiting to be cashed, only the product does not exist!

I know most people are switching to laptops, but more and more people also have multiple computers. I still want a decently powered mid-range desktop in addition to my laptop. I want something that has some expandability and can drive my HDTV with video or I can add a Blu-Ray drive to and has somewhat close to Mac Pro power, but slightly smaller than my G5. And I'm stubborn, I'm never going to buy into the iMac All-In-One Disposable computer model nor have I ever. At least with a desktop, if my LCD goes down, I can replace it, plus I can more easily run 2-3 displays or buy a bigger display at some point in the future or upgrade video or memory. Apple is seriously missing out on this market and lots of these people represent potential PC switchers too. I just don't get it.
Why not?

I'm shocked Microsoft hasn't done a commercial where they lambast Apple by searching for a desktop computer and find that Apple has NONE in a certain price range which strangely, would be easy for Apple to produce.

Are you listening Microsoft?

(Disclaimer: The iMac is NOT a desktop, it's an ALL-IN-ONE, there IS a distinction.)

Odd, my iMac sits on top of my desk, is not portable, is not pocketable, and will not sit (comfortably) on my lap.

Hence the iMac is a desktop.

And if you want to throw out the "expandability" chestnut, please give me your approximation of the percentage of "desktop" computer users who actually crack the cases on their machines and "expand" anything during the lifetime of that computer.

(My guess: 5%?)

Hmm, I guess those are just "ALL-IN-ONES WITH DETACHED MONITORS" then.

That's only because ONLY 5% CAN AFFORD AN APPLE MAC PRO THESE DAYS! LOL

And I noticed you didn't dispute any of my other comments other than the definition of a "desktop". LOL

Good choice. Technically you win, but I think I made my point, nonetheless.

 

[MacFly123]

"Garbage" would imply that the low-end section is somehow less profitable [ or less desirable] than the high-end. It may be on an individual sale basis, but considering the tremendous exponential growth of sales in the low-end market [compared to the high-end], I'm not so sure what your getting at. Apple has already "cornered" the high-end market, as evident in the heading. Where exactly do you expect future the growth to come from? Those "Garbage Scraps", as you call them, are proving to be the better future investment. Dell makes $2.914 billion in net income with a measly 14% market share in the "garbage scraps" market. Apple's Mac business makes around the same amount with 91% market share. So, YOU may prefer to live in the "high end", but any intelligent person SHOULD be able to discern the better market here [from a business perspective, that is].

Competition is simply part of the game, it shouldn't drive any competent company away from potential profits.

Im sorry that you have taken license to describe what exactly the intent of my verbiage was. Myself and many many other business men would highly disagree with your statement. Apple's immense success and profits are based exactly on the model you are refuting. Also your statements of exponential growth in the low end of the market contradict experts reports and data from the industry (including the report in this article).

Apple did once try to compete in the model and sector of the market you speak of and almost went out of business. Their resurrection and unprecedented success since has been because of the model you so freely disdain!

 

[Vyriss]

Im sorry that you have taken license to describe what exactly the intent of my verbiage was. Myself and many many other business men would highly disagree with your statement. Apple's immense success and profits are based exactly on the model you are refuting. Also your statements of exponential growth in the low end of the market contradict experts reports and data from the industry (including the report in this article).

Apple did once try to compete in the model and sector of the market you speak of and almost went out of business. Their resurrection and unprecedented success since has been because of the model you so freely disdain!

And Microsoft/HP's greater success and profits would point to...? The PC market is entirely different than it was when last Apple tried. Apple itself is entirely different. Old rules don't apply.

 

[gunraidan]

Like I've been saying. There is a huge potential market for Apple for the more average pricing computer line (I.E. $599-899 market). The $1000+ market is starting to get saturated for Apple (yes it's growing, but still).

 

[Eidorian]

Guys, why all the fuss? I do not understand why this thread has become so heated...

People buy the personal computer they want/need/can afford and base the decision on what to buy on any number of things, such as the finish of the case, software availability, graphics options, power consumption, noise, pricing, user experience, product support... the list goes on and on - and things are weighted differently from person to person.

"High-end", "Overpriced", "Bargain", "Trash" - they mean different things to different people under different circumstances.

It's all very subjective.

Apparently non-Mac owners are suffering.

Apple has to save them.

 

[BaldiMac]

Those "Garbage Scraps", as you call them, are proving to be the better future investment. Dell makes $2.914 billion in net income with a measly 14% market share in the "garbage scraps" market. Apple's Mac business makes around the same amount with 91% market share. So, YOU may prefer to live in the "high end", but any intelligent person SHOULD be able to discern the better market here [from a business perspective, that is].

If you want to make an Apples to Apples comparison:

Dell made $2.914 billion in net income on 14% global market share (assuming your numbers are correct)

Apple made $2.5-3 billion in net income on 3.3% global market share (Total net income for 2008: $4.8 billion)

 

[Vyriss]

If you want to make an Apples to Apples comparison:

Dell made $2.914 billion on 14% global market share (assuming your numbers are correct)

Apple made $3.3 billion on 3.3% global market share

No. $3.3 billion is revenue for this quarter, not annual profit. Apple made $4.83 billion in profit last year, which what I assumed was 50% from Mac sales. That comes out to around $2.5 billion annual profit from Mac sales, assuming we're not totally off base. Dell made $2.914 billion last year.

So... $2.914 billion for Dell with a 14% market share in it's respective market. And ~$2.5 billion for Apple with "91%" in it's market.

Besides, I never questioned the current profitability of Apple's high-end market share. However, take note at the title of this thread. "Apple claims 91% of $1,000+ PC Market". Where is the future for growth? Dell has a potential to double, triple, even quadrupole its market share in its respective market. Apple? Essentially limited to 9% growth.