Apple's US Market Share Slips in 1Q 2009

[MaxiKana]

I wouldn't expect them to price the same as the competition. But even if they met them HALFWAY, that would make a huge difference and be much more competitive.

They would make a basic computer because it would sell like crazy, even if it wasn't as cheap as the competition.

Right now apple's laptops start at 999 when PCs can be had for 299. Is a basic mac laptop for 599 or 699 really so outlandish a notion?

Yes, then their computers would be atractive to people who don't want to pay what Apple prices their computers at now. This would also make their margins smaller which means they would have to sell more to get the same profit which means they would have to invest in more factories which means quality control would be harder which means...

Apple does know what they are doing. They are playing it very smart. Since they ship so few computers compared to HP and Dell AND since they have outsourced manufacturing they have NO warehousing. NO amount of money is sitting around waiting to be sold, it's all in use generating more money.

 

[linuxophile]

I said so!

Well, I precognized that (sort of), before that report, less than one week ago.
https://forums.macrumors.com/showthread.php?p=7451788#post7451788

Ah.

Analyze that, Gartner!

That said, I am happy with the eee1000HE
https://forums.macrumors.com/showthread.php?p=7442812#post7442812

 

[MaxiKana]

Sure, that's what apple DOES do. But the question is what apple SHOULD do.

I'd argue that some strategic "budget" machines, both laptop and desktop could be done and still have a good profit margin for the company, and would increase revenues and profits for the company. But we'll never know if that's right until Apple actually gives it a shot.

Yes, but that is more of a brand question. If they release a cheap computer (relatively speaking) people would slowly start to see Apple as a company that makes cheap computers. Then sheik Ali-Bin Muhammed who owns a couple of oil wells (heck, they are the only ones with the money left, and ofcourse Haliburton) wouldn't buy an Apple since it is no longer a premium brand. Rather he buys a Sony Vaio, because they ARE a premium brand.

 

[ppnkg]

Falling marketshare? Why would this be a surprise to anyone?

With what they offer and the price they offer it, in this economy? The mini's price is outrageous, and I highly doubt that apple will ever come up with a reasonably priced netbook or even a netbook at all. So apple does not really compete in the most dynamic part of the market today. Even if apple performs well in the macbook/imac class and above, there's no question about not losing marketshare.

 

[IrishSniper87]

I think the reason why apple is not entering the netbook market is pure marketing.

First of all they want to be a fancy brand. When people want a macbook they will save the money and buy it later. They look on the long term. Apple does as well. Prefers to offer also more quality (look at the numbers of crashes.)

This brings me to a second point. When Apple would lower prices, more people would buy. More marketshare can be horrible. IMO the kernel is not as protected as everyone claims. The software is not so airtight as they claim it to be. When i hear people, they would like an apple because 'its virus-free'. The faster the market share rises, the faster this CAN appear not to be true (I dont say it will). I just think they want to play safe. A lot of people use Apple for graphical design, or that is also the marketing around it. Combine that with virusses and a rather inactive antivirus market, and you will see this share drop.

Notice also the iphone is all about marketing. Its MARKETED as one of the top class mobile devices. They cannot permit themselves to lower prices.

The orginal iPhone was $600. Then $400. Then $200. I know part of that is subsidizing, but they sure as heck DID lower prices and it made it MORE popular.

 

[TheSlush]

i dont think apple cares about market shares, they worry more about making great products.

Precisely. Everyone still expects Apple to think and act like any other manufacturer. How long will it take for them to see that Apple does not do this?

Forget netbooks. Yes, they're cheap and popular. But Apple is not going to chase the trend after the fact by releasing a cheap, low-end version of their existing laptop product line. They don't do that. Especially not to gain something they care as little about as market share. Ooooooh, market share... <<cue dramatic music>>

Would you tell Rolls Royce that they're missing all the opportunities that Toyota is snapping up??

(Okay, bad example. )

Apple will do what they always do: invent, innovate, start trends, not chase them. They're going to leverage their significant investments in multi-touch, probably by releasing a tablet that will potentially do several things:

- compete for the netbook audience
- expand multi-touch as a computing interface
- bolster the struggling print publishing industry by offering a product (tablet) and infrastructure (iTunes store) to revitalize yet another industry that is struggling with the digitization and demonetization of their product. (See iPod, music industry.)

 

[MaxiKana]

The orginal iPhone was $600. Then $400. Then $200. I know part of that is subsidizing, but they sure as heck DID lower prices and it made it MORE popular.

No, Apple didn't lower prices. Apple still gets 600$-ish per phone. AT&T (& co) lowerd the prices so that more people would buy the contracts so that THEY would get money. In turn Apple gets more money. But NEVER did Apple lower the prices and I believe that Apple doesn't really like it that the iPhone is sold at such a cheap price.

 

[IrishSniper87]

No, Apple didn't lower prices. Apple still gets 600$-ish per phone. AT&T (& co) lowerd the prices so that more people would buy the contracts so that THEY would get money. In turn Apple gets more money. But NEVER did Apple lower the prices and I believe that Apple doesn't really like it that the iPhone is sold at such a cheap price.

I am willing to bet Apple is happy with the price point AT&T sells the device for.

They still get between $500-$600 per device, and AT&T and Apple have the iPhone at a price thats a sweet spot between affordability and top end.

Apple would be crazy to be upset with the iPhone's current $200-$300 with contract price. They still get PAID, and now they sell like CRAZY.

It would be different is Apple was getting LESS per device, but they ARE NOT.

 

[milo]

Why do you guys even care about Apple's marketshare?

Because market share is directly related to third party development of apps and peripherals.

Yes, then their computers would be atractive to people who don't want to pay what Apple prices their computers at now.

Isn't making the product attractive to more buyers a GOOD thing?

This would also make their margins smaller which means they would have to sell more to get the same profit

I don't agree that margins would necessarily have to be smaller, there is room for a machine that is less than a grand that still has a decent profit margin. And the lower price would mean they WOULD sell more.

Apple does know what they are doing. They are playing it very smart.

I would say they are playing it very conservative. They aren't taking a risk, meaning they can keep their income the same or improve it a bit. But I think they are missing a bigger opportunity by being so cautious.

Yes, but that is more of a brand question. If they release a cheap computer (relatively speaking) people would slowly start to see Apple as a company that makes cheap computers. Then sheik Ali-Bin Muhammed who owns a couple of oil wells (heck, they are the only ones with the money left, and ofcourse Haliburton) wouldn't buy an Apple since it is no longer a premium brand. Rather he buys a Sony Vaio, because they ARE a premium brand.

That all assumes that people all buy macs as a status symbol. Right now many people see macs as overpriced, and that limits their sales. I don't buy the argument that selling a netbook somehow cheapens the top of the line MacBook Pro. Does the mini cheapen the Mac Pro? Heck, Apple sells a $49 iPod shuffle, does that cheapen the touch or iPhone? I don't see it.

 

[ChrisA]

People here need to remember that Apple's goal is NOT market share. Can I say that again? They are NOT going after market share.

The goal is to make money. Anyone can gain market share simply be dropping the prince and accepting a smaller margin on each unit sold. Or Apple could simply make a conventional desktop computer and sell it for $1K and gain a huge jumop in market share. But that is not their goal.


In theory there is a curve. At one end you sell product at your cost. You sell a lot of product but don't make any money. At the other end you price it very high but no one buys. At some point on the curve profit is maximized and it should be clear that profit is not maximum when you are selling the greatest number of units.

 

[BTW]

It's not just netbooks. People can get full size PC notebooks for around $699. Apple doesn't have a price point there for these poor economic times.

You watch though, Apple's Netbook may boost their sales only if it is subsidized through a cellular modem package.

Tablets are a small niche. Pen computing sucks, but I'm sure it is fine for UPS drivers.

 

[BVeritas]

If you go to the following link, you'll find that when it comes to actual use, the Mac share has increased. To me, this implies that netbooks are second machine purchases. Users still use their main machine for most of their work. Apple does need an iTablet for this use, since users tend to buy a matching desktop environment. An iTablet will make the iMac and Mac Pro sales explode.

http://marketshare.hitslink.com/os-market-share.aspx?qprid=9

 

[akm3]

NetBooks are the name of the game people. With no money in the economy people are spending less buying cheaper computers only to realize the NetBook is all they really need. Apple better get with it and put out a $399 10" MacBook Air of their own!

Screw tablets.

That is short term thinking. If Apple did that they would be shooting themselves in the foot. Apple can not and should not try to compete with the Windows market in a race to the price bottom.

An Apple netbook could and would destroy their margins and cannabalize their higher end sales. It would be the beginning of the end for Apple, and therefore is a bad idea.

What they should do is keep doing what they are doing, ride out this wave, and when the economy picks up again they won't have cheapened and destroyed their brand and continued to make billions of dollars.

 

[Anuba]

Apple aren't actually after market share. Apple make high-end computers for people with the cash. They do not make budget computers.

If they weren't after market share, why did the come up with products like the iBook, the iMac, the MacBook and the Mac Mini? These are neither high-end nor expensive -- they might be overpriced for their specs, but they're still much more affordable than many popular PCs out there. It doesn't get any more low end than the original Mac Mini G4. All their machines are mainstream consumer products except MBP and MP. And that's just the computers (don't get me started on iPods, the iTunes store, etc...)

Furthermore, the main theme in Apple's ads for the last 10 years or more has been switching from PC to Mac. The "Switch" campaign, the "Get a Mac" campaign (a.k.a. "Hi, I'm a Mac..."), the introduction of BootCamp, the constant mockery of Vista -- if Apple aren't after market share, why do their ads scream WE WANT A BIGGER MARKET SHARE so loud it can be heard to neighboring galaxies?

 

[MaxiKana]

People here need to remember that Apple's goal is NOT market share. Can I say that again? They are NOT going after market share.

The goal is to make money. Anyone can gain market share simply be dropping the prince and accepting a smaller margin on each unit sold. Or Apple could simply make a conventional desktop computer and sell it for $1K and gain a huge jumop in market share. But that is not their goal.


In theory there is a curve. At one end you sell product at your cost. You sell a lot of product but don't make any money. At the other end you price it very high but no one buys. At some point on the curve profit is maximized and it should be clear that profit is not maximum when you are selling the greatest number of units.

Exactly. Spot on.

 

[dejo]

People can get full size PC notebooks for around $699. Apple doesn't have a price point there for these poor economic times.

Apparently, Dell doesn't have a price point there either then. The economy is constantly used as an excuse as to why consumers will shy away from Apple and purchase lower prices products but that doesn't hold water if you look at Dell losing 16% market share in the quarter and whose profits were down 48%, according to their last quarterly report.

 

[benpatient]

Apple is all about making premium computers, why would they lower their margins and make a basic computer priced at the competions level? They have the Mac mini as their low-end computer, and that one is also priced higher than the competition. Design + Software = High margins.

It's lite Porche making a budget model..
You're effectivly diluting the brand and thereby lowering the user experience and overall appeal. They would get lower profits, in exchange for larger market share. Why, in your opinon should they do this?

As for the news, of course highpriced computers suffer during a recession.

The only problem with your analogy is that Porsche, AG owns a majority stake in VW Group.

If Apple owned Acer, you'd have a point.

They don't. They almost certainly won't.

 

[Anuba]

Apparently, Dell doesn't have a price point there either then. The economy is constantly used as an excuse as to why consumers will shy away from Apple and purchase lower prices products but that doesn't hold water if you look at Dell losing 16% market share in the quarter and whose profits were down 48%, according to their last quarterly report.

There are many different effects at play. Ikea are seeing a large drop in sales, while some exclusive furniture manufacturers aren't noticing any difference at all. The reason being that the latter's target demographic always has money no matter which shape the economy is in, but the former's target demographic is totally spooked and holding on to every penny for dear life. It might be that Apple's Mac Pro and MacBook Pro sales remain strong, while Mac Mini and MacBook sales are plummeting.

 

[jayducharme]

Actually, if Apple would be willing to sacrifice a little bit of their larger-than-industry-average margins, and price their existing computers a little bit more competitively, that could go a long way too.

That's what I'm thinking, too. I mean, heck -- they've got plenty of cash reserves. If they priced their version of a netbook competitively, it would be good for their bottom line: a lot more people would purchase the device, many who otherwise wouldn't buy a Mac. Their experience with the device would then prompt those people to "come into the fold" and buy more Apple products.

 

[IrishSniper87]

That is short term thinking. If Apple did that they would be shooting themselves in the foot. Apple can not and should not try to compete with the Windows market in a race to the price bottom.

An Apple netbook could and would destroy their margins and cannabalize their higher end sales. It would be the beginning of the end for Apple, and therefore is a bad idea.

What they should do is keep doing what they are doing, ride out this wave, and when the economy picks up again they won't have cheapened and destroyed their brand and continued to make billions of dollars.

Yeah, but if they are not careful, they could easily out price themselves into oblivion, which is exactly what will happen if netbooks and laptops become the end all of computing. Netbooks for portability, and laptops for upper end with the benefit of limited portability over a tower, with towers being high end game/graphics only.

I will have people argue that it is impossible and blah blah blah, but by not looking for new ways to make money AND keep the brand name respected, Apple could be shooting themselves in the foot. A GOOD netbook with a resobably price is superior to all other netbooks will be a HIT more so then a failure. Of course, if the device sucks, the branding will be bad. It's not so much the price that matters as much as the product itself.

I mean, look where Apple was in the 90's.

All these people claiming Apple is infallible and such don't realize that they HAVE made mistakes in the past and they sure as heck can make them now.

Now, Apple has done VERY right with iPod and iPhone, but as far as Mac's go, I don't think Apple has the same solution.

It's a potential lose-lose situation for Apple. I bet they will release a netbook type, BUT the price will be very un-netbook like, if they do it at all.

I mean, Apple charges $2000 for a 15' laptop that has comparable specs to computers HALF THE PRICE. The $1299 macbook might match up favorably with the competition (reasonably priced but also higher end), but the pro's pricing is a joke. The 17' even more so.

 

[TheSlush]

People here need to remember that Apple's goal is NOT market share. Can I say that again? They are NOT going after market share.

The goal is to make money. Anyone can gain market share simply be dropping the prince and accepting a smaller margin on each unit sold. Or Apple could simply make a conventional desktop computer and sell it for $1K and gain a huge jumop in market share. But that is not their goal.


In theory there is a curve. At one end you sell product at your cost. You sell a lot of product but don't make any money. At the other end you price it very high but no one buys. At some point on the curve profit is maximized and it should be clear that profit is not maximum when you are selling the greatest number of units.

Amen, brother. Say it a third time!

 

[dejo]

There are many different effects at play.

Exactly. So to boil it down to "Macs are too expensive for this economy" is being simplistic at best.

 

[AlexisV]

Maybe this is due to the silly price rises the other month.

 

[Anuba]

The only problem with your analogy is that Porsche, AG owns a majority stake in VW Group.

If Apple owned Acer, you'd have a point.

They don't. They almost certainly won't.

Exactly. The VW Group has everything from low-end Chinese Volkswagens and Czech Skodas, to Bentleys, Lamborghinis and Bugattis. They have their asses covered in all market segments. And this will help Porsche weather the storm.

BMW, on the other hand, only has premium products (BMW, Rolls-Royce and their premium supermini 'Mini Cooper'), and they're having a much harder time coping in this economy.

 

[Babybandit]

I don't get what's with everyone thinking "Apple's going to fail with the pricepoint". They are very much selling the same amount in relations to the total computers sold.

Why in the world would, and should Apple lower their pricepoint? They serve to the richer market sector, not to anyone, and the price is the thing that separates them from Dell or Hp.

Apple usually isn't the one to start a new market, they master the market when they see a hole in the market. SmartPhones, they weren't the first, but they revolutionized the world. (iPhone), the MacBook Air. It wasn't the first Ultra-Portable, but look at how many companies started competing with them for the market (Adamo).

Apple doesn't really start a market, they just make the best of it, they are also not serving the average Joe. They have marketed themselves to sell to a market sector who are willing to pay the high price, there should be no reason they're changing it.