Mac market-share myth

Matthew JC. Powell
20 May, 2008
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I’ve often said, quite unashamedly, that Apple’s oft-discussed market share was not an accurate representation of its position in the market. The figures are skewed, I contend, by the inclusion of markets in which Apple does not compete. A recent analysis by market-research firm NPD bears this out.

According to NPD, Apple’s overall share of PC sales at traditional bricks-and-mortar retailers during the first quarter of this year languished at about 14 percent. However, if you exclude computers costing under $US1000, Apple’s share rises to a staggering 66 percent. Two-thirds of all computers sold at traditional retailers to customers with over a grand to spend are Macs.

These are iPod numbers.

And lest you accuse me (or indeed NPD) of being selective in our use of figures, consider this: almost every Mac costs over $US1000. Sure, you can get most Mac minis for less than that depending on configuration, but clearly Apple has decided it doesn’t want to have too much of a play in the sub-$US1000 market. And that strategy is paying off.

Handsomely.

You may also be thinking that that 14 percent figure seems unexpectedly high. Well, it is. That’s because NPD was only looking at retail sales, so it wasn’t including sales through VARs and systems integrators — the kinds of dealers who sell to corporate customers who buy 5000 computers at a time. My contention has long been that Apple’s much-touted two percent and similar market-share figures rather unfairly include such sales.

Until Apple makes a serious play for the corporate market, I don’t think it should be graded down for not selling many Macs to corporate customers. Quite simply, 5000 employees of a company that supplies them with standard beige Windows boxes have not made a choice about what computer they’re going to use.

When you look at people who actually make a decision about what computer they’re going to buy, as NPD has done, Apple’s figures rise dramatically.

One caveat is that the NPD figures are just looking at bricks-and-mortar retail, not online. So Apple’s own online sales are not accounted for, but nor are most of Dell’s and a number of others.

The future. More important than this statistical oddity about the quarter just past is to compare it to previous quarters and examine the trends. Yes, NPD has done that too.

In the notebook market, sales of Windows PCs are roughly flat compared to the same quarter a year ago. Apple notebooks, on the other hand, are up “50 to 60 percent” according to Stephen Baker, NPD’s VP of industry analysis.

In desktops, Windows PCs are actually down 25 percent, while Mac desktops have risen 45 percent. In the over $US1000 category, Apple’s share of retail sales last quarter was 70 percent.

I’ll say it again: iPod numbers.

Now I’ll muddy the waters. I seriously don’t think that market share is an indicator of Apple’s position in the market. It’s useful in terms of putting numbers to things and tracking trends and so forth, but really it says little about how the market values what Apple is doing.

For example, a lot of those Mac sales — a surprisingly large yet unquantifiable lot — are to Windows switchers who are going to head home and install Windows on their Apple hardware one way or another. Either Boot Camp, or virtualisation via Parallels or VMWare. Some of them might install Linux or some other operating system.

Once the Mac leaves the retailer, there’s no really reliable way of knowing what operating system it’s running. Microsoft’s figures for sales of Vista are equally rubbery, for much the same reason.

Does a MacBook Pro running OS X Leopard, Windows Vista and Ubuntu count as one machine or three? Does it add one computer to Apple’s market share or a third of a computer? What if Windows only gets used occasionally? How do you calculate what proportion of that sale belongs to Mac market share?

Clearly and obviously you can’t.

The lesson here is that market share numbers should be looked at as what they are: numbers, and nothing more. Apple is clearly doing things the right way for the markets it is choosing to address, and it’s managing to defy the trend the rest of the industry is following downwards. That’s good news for Apple.

What matters to customers is whether or not Apple can maintain its edge in innovation, product quality and customer experience. When you walk into a Mac reseller, you are 100 percent of the market, and Apple should understand that.

If it only convinces you 70 percent to buy a Mac, that’s not enough.

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