Unlike Windows PC makers, Apple doesn’t fret over cannibalisation of its personal computers
Apple’s Mac has been punished by shifting consumer tastes just as has the overall PC industry, data from the company’s earnings statements show.
But in the end, Apple may not care.
“I think PC, and Mac, volumes will continue to shrink as this trend grows stronger,” said Sameer Singh, an analyst at Tech-Thoughts. “But Apple is positioned well to take advantage of it.”
Over the past four quarters, Mac sales gains have languished at seven percent or less and, over the last three, at two percent or less. The worst was the fourth quarter of 2012, when Mac sales were down 22 percent compared to the same period the year prior.
Some of that has been Apple’s own doing – 2012′s fourth quarter plummet, CEO Tim Cook explained in January, was due to the near-invisibility of the company’s all-in-one iMac desktop – but even the best of the past 12 months’ results look paltry when juxtaposed against those of previous years.
In 2010 and 2011, total Mac sales were up 29 percent and 23 percent, respectively. Even in the depths of the Great Recession of 2008-2009, unit sales in the latter year were 13 percent higher than the one before.
But 2012′s total Mac sales were down four percent from 2011.
It’s not likely to get much better later today when Apple announces its first-quarter sales figures for the Mac, assuming the estimates of 57 analysts are on target. The median of their forecasts, approximately 4.1 million Macs, would represent a two percent increase over the same quarter last year.
That jibes with numbers from the NPD Group, which tracks US retail sales, and which last week said Mac sales were flat in the first quarter.
Figuring out why Mac sales have gone soft was relatively easy for David Daoud of IDC. In an interview two weeks ago, he dissected what others called a “brutal” quarter for PC shipments.
“Apple’s facing a very similar environment [to the PC industry in general],” Daoud said then.
According to IDC, the 14 percent decline in PC shipments was caused by a whole host of factors – “a perfect storm,” as Daoud put it – including the failure of Microsoft’s Windows 8 to attract consumers; a general saturation of PCs, especially in developed countries like the US; the fact that PCs bought since 2008 or 2009 remain ‘good enough’ for what consumers want out of a desktop or laptop, thus increasing the time between new purchases; and in some parts of the world, stagnant economic conditions.
All but Windows 8 would apply to Macs too.
Rather than purchase PCs or Macs, consumers have decided not to replace aging machines, analysts have opined, but instead have taken those dollars and spent them on other computing devices – tablets in particular, as well as smartphones.
In other words, Apple’s iPad is likely a big reason for the Mac’s limp growth in 2012, just as it and the less-expensive tablets running Google’s Android were among the causes of the even larger drop in Windows PC sales.
A major Mac slump, however, did not worry Cook in January. And, if his past is any hint, a continuation of that trend won’t perturb him much today, either.
“I am sure there was some cannibalisation of Macs there,” said Cook during the company’s last earnings call, referring to iPad sales and their impact on Macs. He then launched into a refrain he’d used before. “[But] I see cannibalisation as a huge opportunity for us. On iPad in particular, we have the mother of all opportunities here, because the Windows market is much, much larger than the Mac market is.”
Singh agreed. “The iPad’s cannibalisation of the Mac is fairly natural. Apple executives have been upfront about this, but I don’t think it affects them as much as it affects other PC manufacturers.”
He had a point.
When iPad and Mac unit sales are combined – an approach more analysts are seeing as appropriate, since tablets are taking over at least some of the chores once relegated to personal computers – Apple’s year-over-year growth remains on the positive side.
True, the combined unit sales also show a slowing of gains in 2012 from the triple-digit growth of 2010 and early 2011, but the numbers for last year would be envied by any company, ranging from a high of 87 percent in the first quarter to 18 percent in the third.
Still, Apple’s stock has taken a beating since last September, down 43 percent from its high of US$702, in part because investors see the slowing growth and are nervous.
“Apple’s stock price reflects a growing realisation that growth in the high-end market for the iPhone and iPad is drying up, compared to the competition,” agreed Singh. “But I don’t see Mac cannibalisation as a prime concern.”
Nor can a continued Mac slump drastically affect Apple’s balance sheet, for the simple fact that personal computers have become virtually a side business for the company. In the fourth quarter of 2012, Mac sales accounted for just 10 percent of Apple’s revenue, a record low, besting the first quarter of 2012, when computers accounted for 12.9 percent of Apple’s revenue.
“Apple has a much bigger revenue presence in tablets than other PC manufacturers do,” said Singh.
by Gregg Keizer, Computerworld