Mac Marketshare Growth in High End Retail Market

[arn]

I don't think Apple wants the $500-$750 market anyway. Apple wants to make $$$ and the profit margins in that range are miniscule. Higher-end products usually command higher profit margins. iTunes breaks even so that we will buy expensive iPods!

Possibly.

I think what this shows is that if Apple wants to ever get to above 10-15% marketshare, they are going to have to compete in the sub $1,000 price range.

Either that, or somehow convince people who are buying the sub $1000 computers to buy $1000+ computers.

If Apple keeps doing well, they will have to compete in the $500-$700 market, because that will be where the rest of the customers are. Let's say Apple takes 100% of the above $1000 market. That still means Apple only has like 15% (a guess) of total PC marketshare. It's not like they can just say year after year, oh we're happy with 100% of the above $1000 market, and not go after the rest of the market.

arn

 

[megfilmworks]

Absolutely, that is the key to the success of Apple and its product line.

 

[Call42350]

So would the online and institutional sales help or hurt these numbers?

 

[arn]

So would the online and institutional sales help or hurt these numbers?

institutional/enterprise sales would hurt these numbers as there are a lot of companies buying PCs.

arn

 

[Grimace]

Call me crazy but I don't think Apple wants every customer out there. I think the goal is to sell computers that are profitable, even if it means selling less profitable ones that "halo" into future purchases of more profitable computers.

Apple doesn't want the "mod" squad building Mac Pro Minis - Apple wants to present its all-in-one solution that works, leaving the variables and a fair chunk of potential "mod" customers out in the cold. Apple creates its own customer niche/base, and then tries to serve it 100%. Just an observation...

 

[Sun Baked]

I don't think Apple wants the $500-$750 market anyway. Apple wants to make $$$ and the profit margins in that range are miniscule. Higher-end products usually command higher profit margins. iTunes breaks even so that we will buy expensive iPods!

Look what happened to the companies that offered bargain-basement computers: Gateway, eMachines, Dell -- yikes, not profitable...selling eleventy-threeve-zillion computers at $299 won't help if your margins and R&D costs limit profit to 5%.

Actually nice to have management of a company that looks at the total company and the future, instead of looking at filling a temporary short term goal of gaining marketshare at the expense of the balance sheet (cough eMachines and subsequent BK).

We knew Apple had one of the fastest growing PC businesses around without catering to headless iMacs and others cheap crap crowd, didn't realize it was actually capturing THIS MUCH of the premium market so quick.

Yes, should be interesting to see where Apple goes later with this. Since they are still basically a 2 chipset company ... and there is ample opportunity for growth on their terms.

 

[Chef Medeski]

Possibly.

I think what this shows is that if Apple wants to ever get to above 10-15% marketshare, they are going to have to compete in the sub $1,000 price range.

Either that, or somehow convince people who are buying the sub $1000 computers to buy $1000+ computers.

If Apple keeps doing well, they will have to compete in the $500-$700 market, because that will be where the rest of the customers are. Let's say Apple takes 100% of the above $1000 market. That still means Apple only has like 15% (a guess) of total PC marketshare. It's not like they can just say year after year, oh we're happy with 100% of the above $1000 market, and not go after the rest of the market.

arn

You can if you sell iPhones.

But seriously, it could involve a major shift, which a bit of a foreshadowing exists of, off a major shift towards servicing customers. I mean if they can sell great computers if they can sell more service for each computer, then they could keep that marketshare. Theres so many options when it comes to running a business, one doesnt always have to follow the typical route.

 

[rareflares]

I am not TOO surprised by this.

After all, this doesn't include any online sales. I'd imagine, Dell, Gateway, HP, etc. sell the vast majority of their computers online and thus wouldn't be included in these statistics. Apple's retail presence is clearly superior to any of the other companies so obviously their marketshare would be superior to any other company.

 

[inkswamp]

Call me crazy but I don't think Apple wants every customer out there. I think the goal is to sell computers that are profitable, even if it means selling less profitable ones that "halo" into future purchases of more profitable computers.

But Apple's current line-up doesn't make sense to a lot of potential customers. Apple needs to deal with the fact that they are attracting lots and lots of interest from Windows users who are looking for something a little more PC-like, hardware-wise. It's not a matter of whether Apple's approach is better or worse. It's all about what these customers are accustomed to and can relate to. I know two Windows users myself who were expressing a strong interest in buying Macs, but each eventually caved and went with a Windows box because the iMac being an all-in-one didn't make sense, the Mini was underpowered and the Mac Pro was too expensive. (I know a third PC user interested and he's building a hackintosh... and going a good job with it too.)

We can all argue the merits Apple's current line of computers, but it's painfully obvious at this point that Apple should just take the components of a couple of the iMacs and repackage them into headless machines for around $900-1400. I don't think that would so much cannibalize the existing line-up as it would attract a ton of new customers.

 

[thejadedmonkey]

What if their sub $1000 PC's used the same GUI as the iPhone/iPod Touch?

Jobs: We discovered that the average user only uses one or two programs at once, so we've made it dead simple for even the oldest grandparent to experience a computer.

Touch screen iMac with 8 pre-loaded programs:
Dictionary
iCal
iChat
iTunes
Maps
Mail
Safari
Word (like app)

 

[twoodcc]

great news for Apple, though i would like to see more hardware under $1000

 

[mambodancer]

Makrket share doesn't matter!

Possibly.

I think what this shows is that if Apple wants to ever get to above 10-15% marketshare, they are going to have to compete in the sub $1,000 price range.

Either that, or somehow convince people who are buying the sub $1000 computers to buy $1000+ computers.

If Apple keeps doing well, they will have to compete in the $500-$700 market, because that will be where the rest of the customers are. Let's say Apple takes 100% of the above $1000 market. That still means Apple only has like 15% (a guess) of total PC marketshare. It's not like they can just say year after year, oh we're happy with 100% of the above $1000 market, and not go after the rest of the market.

arn

I see this kind of faulty thinking all the time. As if market share equates at all with profitability or long term success. It just doesn't.

Having owned a computer store in the 90's, our market share in Boulder was small compared to our competitors (Radio Shack, Computerland, etc.) However, we were one of the most profitable stores in Denver because we focused on service and support and constantly watched our margins. We would not bid on educational markets that in some cases required stores to sell below cost and hoped to make it up on service contracts. That was insanity. I can remember one of the top selling Connecting Points receiving an award for top reseller of the year (I think about 26M in sales versus our 2M) at a corporate trade show at the same time ITT commercial finance was padlocking their doors for default on their loans. A lot of these businesses essentially had the motto "Sell it below cost and make it up in volume!"

Apple needs to be really careful about pursuing the low margin/sub-$1000 Macs if the company is to stay as healthy as it has been.

 

[Axemantitan]

This is good news for Apple. But, do remember that this is only for retail. As I recall, Dell is online- and phone-orders only. They are still the leading PC manufacturer.

 

[MacinDoc]

Useless statistics because of the sales that were excluded. Yes, Apple's share of B & M sales is increasing, but Apple is increasing the number of its retail stores, so that should come as no surprise. And to separate out machines that were more than $1000 is almost like saying that Apple sells 99.9% of all machines that come with OS X pre-installed. Apple sells primarily (relatively) low-volume, premium-priced computers, so one would expect that the majority of premium-priced computes sold would be Macs, if Apple were to have any significant market share.

 

[arn]

Apple sells primarily (relatively) low-volume, premium-priced computers, so one would expect that the majority of premium-priced computes sold would be Macs, if Apple were to have any significant market share.

True, but that share was only 18% in 2006. and is 66% now.

arn

 

[mj_1903]

It's not like they can just say year after year, oh we're happy with 100% of the above $1000 market, and not go after the rest of the market.

Sure they can. That market will continue to grow both on a domestic scale via population growth and an international scale as China and India gain a wealthy middle class. Even if they only focused on $1000+ computers it could easily grow the Mac division at 10-15% per year for the next decade.

 

[inkswamp]

Apple needs to be really careful about pursuing the low margin/sub-$1000 Macs if the company is to stay as healthy as it has been.

You know, I don't think it's so much the sub-$1000 pricing as it is producing a headless Mac more powerful than the Mini.

 

[vhalik]

It would be nice to dip into the sub $1000 PC's, but the margin is near to non-existent.

 

[vhalik]

This is good news for Apple. But, do remember that this is only for retail. As I recall, Dell is online- and phone-orders only. They are still the leading PC manufacturer.

Actually, Dell is sold in Best Buy stores now. At least it has been here in Denver.

 

[rjohnstone]

Let's look at corporate contract sales. This are is where Dell, Lenovo and HP make their real money.
They typically have a 2 or 3 year cycle on equipment replacement which makes the revenue stream very consistent.

We use Dell's workstations and Lenovo ThinkPads and don't pay anywhere near the retail price for them.
A T61 with a street price of $2,500 costs less than $1,000 under contract.
And I seriously doubt Lenovo is hurting on the margins.

So as with any report, it's all in how you look at the numbers.

 

[shikimo]

The Mini is so badly supported and lacks up-to-date hardware..

What's worse, it's a BYOKDM system, unless you want to pay another $600 (price of the system!) for a 20 inch LCD from Apple along with $50-100 for a keyboard/mouse...mine as well get the iMac.

How is the mini badly supported?

And what about all those people who already have a nice monitor? I spent 549 EUR on my mini last August, have a 22" monitor, got a keyboard and mouse that work fine for 44 EUR, and voilà I'm running OSX for less than 600 EUR (19,60% of which was TVA). That's a lot cheaper than an iMac, I've got a bigger screen and, even though I know the mini is underspec'd for the price, it does everything I want it to so who cares? Is an iMac a better value? Of course it is, no argument there; however, I saved 400 EUR by not buying one (as compared with low-end iMac, 999 EUR), and I'm certainly not the only one...

...and besides, now I can use that money to bet on the Penguins to win the Stanley Cup!

 

[Bonte]

The sub $1000 Macs are the iPhone and Touch products, maybe a bigger touch in the future but i don't think Apple wants to compete with cheap PC's. There is no profit margin and not much after-sales profit aka iTunes music and apps.

All cheap Macs will be iPod-like and heavily dependent on iTunes for revenue.

 

[macidiot]

Apple's strategy has been quite clear for some time. In a market that was a race to the bottom, Apple decided to differentiate itself. It did so with quality and design. This is why companies like Dell will and have faltered. Why buy a Dell over any other brand when literally only a plastic logo differentiates it?

As for eventually entering the low end for continued growth, Apple doesn't need it. And frankly, what would be the point of competing in a zero profit market? The next growth area will be business use. It won't be a lot in overall terms, but substantial enough to maintain growth.

iPod growth has essentially flattened out. I suspect computer growth will flatten out in 2-3 years. If it continues past that, it would mean huge trouble for Microsoft, as Apple would be over 20% market share. I just don't see that happening worldwide. Possibly in the US, but virtually impossible globally.

The next real growth driver for Apple is the iPhone. If Apple extends the line to multiple price points, I can see them moving 30-50 million units a year, easily.

Even so, with the current product map, I see Apple growth slowing in a couple of years. Of course, it should be bigger than Microsoft by then...

 

[halhiker]

Are there $1000+ PCs?

The most surprising thing about this survey is that anyone is buying a PC that costs more than $1000. Are those people on crack?

Oh, gamers. Right.

So the answer is yes.

 

[0098386]

I'm quite amazed at how much marketshare Apple are gaining. About 3 years ago when I bought my PowerBook I posted on another forum, asking if anyone else had a Mac.

It became a dangerous thread full of some nasty comments.
Fastforward to now and the vast majority of them are now running Macs. Everyone and their dog has either an iMac or MacBook. The market is really changing.