Mac Marketshare Growth in High End Retail Market

[sushi]

Huge growth rate in the most profitable segment of the market.

This is definitely good for Apple -- stating the obvious!

Obviously, Apple has figured out how to sell computers into the $1,000+ market in a way the rest of the industry has not, and it wasn't about not giving them a choice. It was about giving them a choice they wanted to make.

Spot on.

I don't think Apple wants to capture the sub-$1,000 market. There is very little money to be made in that market. The margins are very poor.

Agree. Everyone seems to be going after that market and margins are very thin there.

Apple has demonstrated time and again that they are not interested in a market of 6% profit margins. Nothing below 28% makes Apple Happy. It is rather obvious that there is a market for a well designed system that just works and works for years.

Seems to be true for the most part.

What strikes me most interesting about this data is that the number of PC's on the market at a retail price point of + 1000 has diminished.

It seems many are looking for a cheap solution when it comes to computer needs. Most use a computer for e-mail, chat, surfing, and simple word processing. A cheap computer can handle these tasks easily. Why pay for computing power you don't need?

You make it sound like sub-$1,00 computers are a bad thing.

Well, for a hundred bucks you still won't get much these days!

Just teasing a little. I know you meant sub 1,000 dollar computers.

The freedom to address a market in the way which preserves their margins is one that is unique to Apple. They are not going to trade away this advantage just because some people would like them to sell budget boxes that complete with the likes of HP and Dell.

So true.

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.

One thing that I've never understood with Apple, is why they don't make a business model or version of the iMac.

Something like this:
- 17 inch widescreen display (like the original Intel one).
- 2.0GHz Intel C2D processor
- On board video
- Combo drive
- 1GB RAM
- 80GB SATA HD
- WiFi and BT (Maybe not needed. Most typical Windows office environments have hardwired LAN with a wired keyboard and mouse. So maybe this could be eliminated to save costs.)

This version would come in under 1,000 dollars and would be great for the typical administrative office, and for many who have limited computer needs. With bootcamp, IT folks could install them as regular PCs running Windows XP and Microsoft Office 2007 which would make a wonderful solution for many office environments.

Of course it would work fine in offices that use the Mac OS side as well.

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

Nice growth!

 

[kornyboy]

Wirelessly posted (iPhone: Mozilla/5.0 (iPhone; U; CPU like Mac OS X; en) AppleWebKit/420.1 (KHTML, like Gecko) Version/3.0 Mobile/4A102 Safari/419.3)

Wow those are pretty amazing numbers. Way to go Apple. I would like for Apple to attempt to break into the sub $1000 market a little more though.

 

[chr1s60]

If Apple developed a $700-$800 computer, it would sell like crazy. A lot of the people I know like Apple and really like my Apple computers, but when it comes time for them to buy one they can't afford the extra money to get the Mac. I think the overall marketshare would make a big jump if Apple had a low end computer that held the same appeal as their current models. It is the one dimension I feel Apple is really missing out on.

 

[mambodancer]

No you can't...

Using laptop processors and 2.5" hard drives isn't helping their margins.

There's still money to be made on a $600 computer. Keep in mind I could build a tolerable midrange quad core for $400 on a good day. I just helped a friend do so. It was an Intel Core 2 Quad as well.

Not and package it, support it, offer a warranty on it, ship it, pay people to build it, store it, etc. etc. By the time you did all that, your margins, if you were lucky would be about 5-10% or $20 to $60 per box. If you are very, very careful about costs and margins, you might be able to make a living.

 

[guzhogi]

Honestly, I thought that remark was fairly clueless. First, Apple does offer a choice under $1,000. Second, everyone has another choice -- they don't have to buy a Mac. Third, if making money in the PC market was as easy as "don't give people a choice," then everybody would be doing it. Obviously, Apple has figured out how to sell computers into the $1,000+ market in a way the rest of the industry has not, and it wasn't about not giving them a choice. It was about giving them a choice they wanted to make.

Sure we have a choice, but is it worth choosing? I feel that just b/c everyone's doing the same thing means they SHOULD be doing that thing.

I don't think Apple wants to capture the sub-$1,000 market. There is very little money to be made in that market. The margins are very poor.

Some money, but not healthy margins. Apple's margins are the envy of the industry because they are not trying to sell in the parts of the market where the margins are poor, which is the bottom end. The margins in the Windows PC business stink, and they pretty much alway have. What we are seeing now is a manifestation of a characteristic which has always separated Apple's business from the Windows OEMs. The PC makers are selling a virtual commodity product. They all function the way Microsoft dictates, which forces the OEMs to distinguish their products mainly on price, resulting in a race to the bottom. They have few opportunities for creating a value-added product, which is what Apple does so well.

Apple has demonstrated time and again that they are not interested in a market of 6% profit margins. Nothing below 28% makes Apple Happy. It is rather obvious that there is a market for a well designed system that just works and works for years.

That's one thing I hate about capitalism: people try to get more money instead of trying to help people. What does Apple need 28% profit margins for? I don't mind Apple being successful, but I feel that they don't need that much profit. They should lower prices, pay their sweat shop workers more, or both. I remember hearing that an iPhone costs about 3 month's pay for the average Chinese person. If that's true, there's a lot of people unable to afford an iPhone. I know, I know, they don't NEED an iPhone, but it would be nice if they were at least able to afford one if they wanted it. I don't see why Apple & other companies can't make it up on volume rather than margins. It's time for Apple to decide what they want more: profits or marketshare.

 

[a456]

Nice to see the old adage, a fool and his money are soon parted, disproved. Looks like people who are willing to spend real amounts of money on computers have the intelligence to buy an Apple not waste it on a windoze box.

 

[Qunchuy]

If Apple developed a $700-$800 computer, it would sell like crazy. A lot of the people I know like Apple and really like my Apple computers, but when it comes time for them to buy one they can't afford the extra money to get the Mac. I think the overall marketshare would make a big jump if Apple had a low end computer that held the same appeal as their current models. It is the one dimension I feel Apple is really missing out on.

One word: refurbished.

I paid much less than $500 for an iBook G4 a few months ago. Refurbished MacBooks direct from Apple are in the sub-$1000 category.

 

[guzhogi]

One word: refurbished.

I paid much less than $500 for an iBook G4 a few months ago. Refurbished MacBooks direct from Apple are in the sub-$1000 category.

But that's for yesterday's technology. I think we mean when Apple announces a new/updated computer, it should be under $1000 the day it 1st comes out, not a few months/years later. Sure, some refurbs are good for some stuff, but won't last as long as the new ones.

 

[csimmons]

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

Define "compete", in this case.

I think Apple has clearly shown that, at least on the PC front, they're competing very well with other PC hardware and software makers, in that they're making serious money with much less risk. I mean, they earn half of MS's revenues DESPITE having less than 10% of the PC market share.

They've shown quite definitively that they don't need to dominate the PC market in order to be successful or competitive, therefore I doubt very seriously that they will even want to get above, say, 20% of the total PC market, especially since mobile computing is the future anyway, and they're well on their way to leading in that segment already.

 

[csimmons]

It's time for Apple to decide what they want more: profits or marketshare.

Umm, Apple already made that decision quite a while ago, thus the high margins on their products. I personally am perfectly fine with Apple's focus being on profits instead of market share, as long as they keep putting out quality products. The often (over) used car analogy really does apply here.

 

[IJ Reilly]

Is that an attitude a company wants to foster when things are going well. These thing run in cycles, you know.

This isn't an attitude Apple is trying to foster. My remark was in response to the quote in the article that Apple was growing its market share above $1,000 because they "don't give people a choice." I pointed out three ways that people do have a choice. The comment missed the fundamental reason why Apple is thriving in the higher-priced market, which, since that was what the article was about, was a fairly big omission.

 

[aliasfox]

One thing that I've never understood with Apple, is why they don't make a business model or version of the iMac.

Something like this:
- 17 inch widescreen display (like the original Intel one).
- 2.0GHz Intel C2D processor
- On board video
- Combo drive
- 1GB RAM
- 80GB SATA HD
- WiFi and BT (Maybe not needed. Most typical Windows office environments have hardwired LAN with a wired keyboard and mouse. So maybe this could be eliminated to save costs.)

This version would come in under 1,000 dollars and would be great for the typical administrative office, and for many who have limited computer needs. With bootcamp, IT folks could install them as regular PCs running Windows XP and Microsoft Office 2007 which would make a wonderful solution for many office environments.

Of course it would work fine in offices that use the Mac OS side as well.



Nice growth!

Apple sold a machine like this up through last year, but as far as I know, only through the EDU channel. In fact, IIRC, at different points there was an on-board GPU/Combo version, as well as an on-board GPU/no Optical/no iSight version as well.

Much as I'd like a mid-range tower to replace my aging Quicksilver (which in some ways is still far more powerful than a mini), it doesn't fit with Apple's philosophy. Think about computers the same way most people think about jeans or cell phones, and you'll understand why Apple sells iMacs instead of midrange towers, practically sealed Mac Minis instead of big boxes.

I think Apple could toy with the idea of small volume licensing - for example, working with the Psystar folks, with the firm understanding that they only have a license to sell x number of units or y million in revenue per year. It would allow Mac OS to be exposed to certain demographics that Apple doesn't cater to, as well as fill niches that simply aren't being met right now, all without heavy impact to Apple's bottom line.

 

[csimmons]

"Consumers don't care about features"

Really? To get a "great experience" I think that requires at least a minimal amount of features. To just say consumers don't care about features, imo, is a bit irresponsible. Especially if I'm paying over $1000 for something I am going to use for hours a day, I better be getting something that is more than just "experience."

If customers really cared about features, then Archos would have the dominant media player on the market, not Apple.

I think many geeks who post here still suffer from "More Stuff = Better" Syndrome; there is a huge difference between having lots of features that few people actually use and that are not well implemented, and fewer features that are practical, useful and well implemented.

 

[Kan-O-Z]

I think the reason Apple doesn't want to get into the sub $1000 market (besides mini) is because they want to sell a quality computer. Dell uses all sorts of tactics to get their computer so cheap. They use specifically made cheap Dell OEM hardware (not the decent retail hardware). Then they get Windows for free if they agree to package in tons and tons of trail software. In the end you get a Dell that is slow, bloated, cheap with a bad OS. You get what you pay for.

Case in point. Dell's Linux machines are not ANY cheaper than a Vista one. Linux is a free OS, Vista is $199-$399.

Another case in point. Let's compare Apples to Apples Dell All-In-Ones. When Dell actually TRIES to make a quality computer using good hardware, good form factor, and having comparable features to an iMac, they can't seem to compete very well. Their prices are actually a tad HIGHER than Apple! On top of that, Dell doesn't have anything that compares with the iLife suite! If you really want to compare, add some more for the Dell for software that will do what iLife does. So in the end, comparing Apples to Apples, Macs are a good deal!

In order for Apple to compete with the really cheap PCs, they would have to really start cutting corners. This in turn will bring the quality and image of Apple down. This is not what they want. They want their computers to be viewed like a Toyota. A little expensive but darn solid, reliable, luxurious, hassle-free and a good experience.

One thing I don't understand about people is they are so crazy about not spending an extra $100 for a computer. I know of a buddy of mine, making a very good salary....and bought a PC in the end because he felt that dishing out an extra $200 for the Apple was useless. He felt that Apple is just over priced and over rated. This kind of mentality amazes me. A computer is an investment (not financially but more for your life). People usually buy a computer and try to keep them for at least 4-5 years. Don't you think it's well worth the extra $100-$200 if every day of your life on the computer is just a little easier and hassle free and more enjoyable for 5 years! I sure would dish out the extra $100-$200!

These same people that are so crazy about not spending the extra $100-$200 will turn around and go out to dinner and blow $100-$200 in one sitting! Amazing! People are truly idiots!

I think once people realize this the choice is clear. They used to sell a Yugo for under $5000. Now do you feel a company like Toyota would want to compete in a sub $5000 car market. Heck no! They have minimum requirements and a sub $5000 car will not meet them! Same with Apple!

Kan-O-Z

 

[CalfCanuck]

More faulty logic ...

If Apple's success continues, however, there will be no where else to look but to the sub $1000 market for additional customers.


Article Link

We went over this before with an article in October 2007 about Apple's excessive sales in the high end notebook market, and the lack of futurue growth possibilities - and debunked the ideas from that "business analyst".

https://forums.macrumors.com/posts/4312295/

To paraphrase what I said in that thread, even if Apple had 100% of the "over $1,000 market" it could still grow much faster than the overall market without selling ANY cheap computers. It is just that it would "grow down" into controlling more of the sub-$1.000 share (i.e. as more people bought computers that cost over $1,000).

 

[MikeTheC]

This thread really makes me laugh, and mostly at the stupidity and arrogance of people who keep screaming that Apple is poised -- perpetually -- on the brink of failure, and oh! how it's all going to come crashing down for Apple if they don't do this or that or the other. Well guess what, folks, Apple's a bit smarter than many of you give them credit for.

Most people out there, so-called "modern society" notwithstanding, neither need nor deserve to have a computer. In fact, most shouldn't be allowed near a computer. And a whopping HUGE percentage of that crowd are not just the sub-$1000 people, but the sub-$500 folks. So many business out there, and this is especially true of the WinTel market, want to suck up every single last person as their customer. Look at the price they're paying for it.

There are plenty of people out there who are, frankly, undesirable to have as a customer, and I don't care if we're talking computer electronics or regular, straight-up retail.

Personally, I think that Apple's name-branded computers should probably start in the $750-$800 range (this would give plenty of margin for Apple to make the no-frills headless system people here crave) and everything else should then be somewhere above $1000.

Of course, I also happen to think Apple should sell unrestricted copies of Leopard and future Mac OS X releases so that intelligent and savvy people can build their own custom spec'd -- and not supported by Apple -- systems which will address whatever wet-dream notions of computer excellence they feel need to be addressed.

I'm not a gamer (unless you include sims 2 which I wouldn't) But you make gamers sound like a sub-species. You know there isn't anything wrong with being a gamer.
Also when I used pc's all of a week ago I always bought higher speced ones which tended to cost round £800 just for the desktop.

Why you... you gamer lover!

 

[Eidorian]

I think the reason Apple doesn't want to get into the sub $1000 market (besides mini) is because they want to sell a quality computer. Dell uses all sorts of tactics to get their computer so cheap. They use specifically made cheap Dell OEM hardware (not the decent retail hardware). Then they get Windows for free if they agree to package in tons and tons of trail software. In the end you get a Dell that is slow, bloated, cheap with a bad OS. You get what you pay for.

Dell is one of the few manufacturers that barely gives you bloatware on their home computers. Unless you consider Adobe Acrobat bloatware.

How is Windows a bad operating system in the hands of a knowledgeable user? How about any operating system?

Case in point. Dell's Linux machines are not ANY cheaper than a Vista one. Linux is a free OS, Vista is $199-$399.

It depends on the model but you can usually save $50 getting an Ubuntu machine. Not to mention OEM Windows isn't $199-399. Which version of Windows is $399? Even at retail prices.

In order for Apple to compete with the really cheap PCs, they would have to really start cutting corners. This in turn will bring the quality and image of Apple down. This is not what they want. They want their computers to be viewed like a Toyota. A little expensive but darn solid, reliable, luxurious, hassle-free and a good experience.

I'd try not to ignore all the nasty threads about bad Apple hardware on MacRumors. Apple does have a lot riding on perceived quality and value just like other manufacturers.

One thing I don't understand about people is they are so crazy about not spending an extra $100 for a computer. I know of a buddy of mine, making a very good salary....and bought a PC in the end because he felt that dishing out an extra $200 for the Apple was useless. He felt that Apple is just over priced and over rated. This kind of mentality amazes me. A computer is an investment (not financially but more for your life). People usually buy a computer and try to keep them for at least 4-5 years. Don't you think it's well worth the extra $100-$200 if every day of your life on the computer is just a little easier and hassle free and more enjoyable for 5 years! I sure would dish out the extra $100-$200!

Know anyone that still uses a Windows 98 machine?

These same people that are so crazy about not spending the extra $100-$200 will turn around and go out to dinner and blow $100-$200 in one sitting! Amazing! People are truly idiots!

It depends on how they value a computer. A meal might be worth more then spending more on computer hardware. I wouldn't try eating your computer.

I'm sure I'm suffering on my cheap beige box computers. I just want to spend more then $1,000 for them! I love OS X but I don't understand the need for an elitist view.

 

[IJ Reilly]

Another case in point. Let's compare Apples to Apples Dell All-In-Ones. When Dell actually TRIES to make a quality computer using good hardware, good form factor, and having comparable features to an iMac, they can't seem to compete very well. Their prices are actually a tad HIGHER than Apple! On top of that, Dell doesn't have anything that compares with the iLife suite! If you really want to compare, add some more for the Dell for software that will do what iLife does. So in the end, comparing Apples to Apples, Macs are a good deal!

This relates to what I said near the beginning of this thread about the value-added proposition. The Windows PC-makers have a very difficult time selling value-added (either through hardware or software features) because they are in a virtually commoditized market for hardware, and also because they have essentially no control over how their products actually work. This is why they are forced to compete almost entirely on price. Apple is uniquely positioned to sell something other than bare boxes at the lowest possible price, which is why we get nicely designed hardware and useful bundled software with a Mac. Apple can capture back these costs, whereas a Dell or an HP is hard pressed to do so.

 

[IJ Reilly]

Know anyone that still uses a Windows 98 machine?

My Dad did, until about two weeks ago, when I gave him the PC I built three years ago.

 

[djcap]

I disagree with the notion that Apple must eventually turn to the low-end market to be successful. I think that part of the company's success hinges on being a smaller percentage of the market, and a company that caters to high-end consumers. I don't really think Apple wants to compete in the same space as Lenovo, Dell or HP.

 

[err404]

Apple only sells one machine under $1000 and that it the Mini. If the current Mini really accounts for a full 1/3 of Apples B&M sales, than I doubt they see a need to change it.

 

[inkswamp]

Every time we have a section of people clamouring for some cheap 'headless mac' for $499 - Yawn.

Yeah... give that strawman a good uppercut. Nice! Knock 'im down!

People asking for a headless Mac aren't looking for a cheap machine. I don't see people asking for that. We want a headless machine that isn't underpowered like the Mini. I'll pay $1000+ for it, but I'd like a damn Mac that isn't underpowered, allows me to pick a decent display and won't put me into debt. Currently, no Mac exists that meets that very reasonable criteria. Not everybody looking for a headless Mac needs a Mac Pro.

Jobs will NOT make a cheap machine - even the mini isnt cheap.

I look forward to adding that one to my list of things Apple would never do.

"Apple would never kill off Classic completely."

"Apple will never open brick-and-mortar stores. It would be a disaster."

"Apple will never make the eMac available to non-educational buyers."

"Apple would never get into the music business. They can't legally do it."

"Apple would never offer iPods for Windows users."

"Apple would never discontinue the iPod Mini. It's way too popular."

"Apple would never create their own browser. They need Internet Explorer on the Mac."

"Apple would never offer iTunes for Windows."

"Apple would never create a 24" iMac. It would be too top-heavy."

"Apple would never create their own office suite. It would make Microsoft angry."

"Apple would never offer a headless Mac."

"Apple would never switch to Intel chips."

"Apple will never get into the cell phone market. It's way too competitive."

"Apple will never create another handheld platform. The Newton was a disaster."

"Apple will never let people run Windows on a Mac."

"Apple will never make Safari for Windows."

"Apple will never let developers into the iPhone. It's a security problem."

"Apple would never call something the Macbook Air. That's horrible sounding."

"Apple will never release a 3G iPhone. It's too power-hungry."

 

[nick9191]

Wow, 66% of all computers over a thousand dollars are macs.

Is that just US I'm guessing.

 

[freediverdude]

Are these numbers Clinton numbers or Obama numbers? I'm so confused, lol.

I think this has to do with 2 things:

1.) that more pc's have come down in price for decent specs the past couple of years, so that a decently specced pc, the kind people consider an investment for a few years, is probably less than $1000 now.

2.) that Apple has raised it's presence in the retail sector in recent years. No longer forlorn displays only at CompUSA, but all their own stores and now Best Buy.

So I think it's a combination of both of these factors.

 

[50548]

erm, isn't that what they're doing with the mini already?

its nice to see apple grow like this, and quite impressive.

it's indeed impressive, and SHOWS that Apple has got its strategy right all along, instead of fighting for crappy and unprofitable market segments.

They dominate the cream of the crop, and leave the crumbs to the poor PC makers everywhere. This is even more so when we see today's numbers on growth of Mac sales, showing that Apple has grown 50%, whereas the increasingly irrelevant PC industry ONLY 16%.

The question that remains is: where are Apple doomsayers now? Where are the PC-fanboys in this forum?

GO APPLE!