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Apple's Mac Surge: 4 Observations

Apple's record-breaking Mac sales last quarter were a surprise -- but 2015 could be even bigger.

Apple iPad Air 2: Visual Tour
Apple iPad Air 2: Visual Tour
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"I usually go through a few updates," Apple CEO Tim Cook said a few minutes into last month's iPhone event. "But we have so much to cover today, I'm dispensing with those, other than to tell you, everything's great."

No kidding. The massive iPhone sales that Apple announced this week as part of its quarterly earnings are impressive but not shocking. But best-ever Mac sales? In a quarter in which the PC market shrank overall? That was a surprise.

Macs supplanted iPads to move up to number two, behind iPhones, in Apple's revenue chain. Granted, iPad sales slid 12.5% relative to last year -- but Apple still sold 12.32 million tablets during the quarter, a sum that exceeds the quarterly PC sales of all but the top two vendors, Lenovo and HP. Even with iPad revenue down, it's no small feat for Macs to have pulled ahead.

Moreover, Apple achieved its record Mac sales despite playing an outsider's role in the Windows XP upgrade frenzy that benefited many Windows OEMs. Viewed from any angle, it was indeed a "great" quarter for Macs.

[Tablet shopping? See iPad Air 2 Vs. Surface Pro 3: No Comparison.]

But what caused this uptick, and is it more than a short-term swing? What does this OS X momentum mean for Windows PCs and their perennial 90%-plus market share? Are rising Mac sales related to sliding iPad sales? Here are four observations about Apple's record-setting Mac sales.

1. Apple outclassed the rest of the PC industry.
According to research firm IDC, the overall PC industry shrank slightly in the most recent quarter -- which makes Apple's big 21% jump in units sold all the more impressive.

Smaller PC makers were responsible for most of the industry's quarterly losses, with the top five PC vendors all increasing shipments compared to the year-ago period. But Apple's 21% increase was almost twice that of any competitor.

What's more, top Windows PCs vendors improved only compared to last year's disastrous sales benchmarks -- not exactly a high bar. Apple, in contrast, earned its best Mac numbers against any historical comparison.

Businesses propelled much of the PC growth during the quarter, with Windows XP's end-of-life deadline driving an obvious uptick in demand for Windows 7 PCs. But Windows 8 and 8.1 PCs continue to post uninspiring sales. In an effort to stimulate consumer interest, Microsoft and its partners have started pushing ultra-cheap devices.

Apple's computers, on the other hand, still cost more than $1,200 on average. Macs have traditionally been more profitable than PCs on a per-unit basis, and if Mac sales volume continues to climb in 2015, Apple will lead the PC industry in profit by a truly epic margin.

Overall, Apple sold 5.52 million Macs, generating more than $6.6 billion in revenue. CFO Luca Maestri attributed the record-setting performance to strong back-to-school sales, particularly for Macbooks. Mac sales also enjoyed double-digit growth across most markets. Sales in emerging markets, where Apple has traditionally been a smaller player, were up 46%.

Apple claims its PC market share is higher than it's been since 1995, though it did not claim to possess a particular share of the market. According to IDC estimates released earlier this month, Apple was the fifth-largest PC vendor during the quarter, with a bit more than 6% market share. IDC underestimated Mac sales by several hundred thousand units,

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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Alison_Diana
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Alison_Diana,
User Rank: Author
10/24/2014 | 2:30:26 PM
Re: Apple's Mac Surge
Many years ago I worked at a publication called Macintosh News and started a project with the University of Miami, where we were tracking students to see whether they went on to use Macs in the office after being exposed to them at school. Sadly, the publication folded and the project ended but it's interesting to see somewhat anecdotal suggestions that my theory (and Apple's theory) was right.
Lorna Garey
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Lorna Garey,
User Rank: Author
10/23/2014 | 5:28:03 PM
Re: Apple's Mac Surge
It also comes down to what you're used to. I find Windows easier to navigate because it's what I learned on. I use a Mac sometimes for work but just don't find its UI all that intuitive for things like connecting to a remote network. Small things like Ariel not rendering properly in Chrome -- or that spinning candy wheel with no ctrl/alt/delete/task manager/KILL PROCESS -- annoy me. Now, maybe someone who uses a Mac all the time could fix these problems easily, but to me it's a time suck.
Michael Endler
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Michael Endler,
User Rank: Author
10/23/2014 | 3:18:54 PM
Re: Apple's Mac Surge
@steve

My experience is similar. Both as an undergrad and grad student, I saw far more Apple computers than anything else. I always pay attention to what kind of devices people are using when I go to libraries, cafes and universities, and the vast majority of the time, MacBooks outnumber other PCs. This is definitely true around the Bay Area but also seems to be true when I go out of town. It's also true at  media and developer events-- way, way more Macs than anything else. The only times I see more Windows devices are at Microsoft conferences. At Monday's Azure event, I think I was the only reporter toting around a Surface. Everyone in my row had some kind of MacBook, except for one journalist who managed to do all his work with an iPad.

Despite my observations, the state of the economy reminds me that Macs must trail Windows by a pretty far margin in overall consumer market share. But I think a lot gets lost in translation if you just look at market share. Who buys computers and why is also a big factor when it comes to describing markets. As far as I can tell, when people are in financial position to choose, they choose Macs at an impressive clip.
Michael Endler
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Michael Endler,
User Rank: Author
10/23/2014 | 11:48:00 AM
Re: Apple's Mac Surge
@zerox,

Thanks for the comments.

Good point.  It's likely some new Mac owners, especially consumers, made their purchases as much due to Windows 8's poor reputation as to Apple's lower prices-- definitely true, and something I could have discussed more explicitly in the article.  

I don't think it's disingenuous to say Apple is dominating the high-end market, though. Apple's PCs sell for hundreds of dollars more than Windows models do and Apple generates much more profit from computers than any competitor. Apple also gets virtually all of its market share from "the high end," even with the price discounts. Expensive Windows models such as new 2-in-1s account for a relatively tiny portion of recent Windows sales, based on survey data.  There are many more Windows options below $1000 than there are Apple options under $1000, but I wouldn't say Apple "doesn't have any competition in this niche." Perhaps I don't understand which niche you're referring to-- but there are plenty of $1000+ Windows PC configurations available, so in that sense, Apple does have direct competition within its chosen markets. Apple just happens to have more momentum than the rest of the field, the presence of cost-comparable alternatives notwithstanding.
Michael Endler
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Michael Endler,
User Rank: Author
10/23/2014 | 9:28:59 AM
Re: Smart tactic
@Shane,


Actually, the math is sort of interesting. On average, Apple lowered prices by much more than $50. The fact that average sales price only dropped $50 suggests that Apple's sales mix actually shifted upward, toward more expensive models. Perhaps the new, lower base prices encouraged more buyers who would have bought base models to go with the mid-tier options instead. Or perhaps people who would have bought mid-tier models decided to splurge on the high-end models. Apple is playing with vaguely similar strategies with its iOS devices-- e.g. using storage configurations to encourage more people to buy at least middle-tier iPhones.
Susan Fourtané
IW Pick
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Susan Fourtané,
User Rank: Author
10/23/2014 | 1:50:22 AM
Re: Smart tactic
Shane, 

"I'm surprised dropping the prices of Macs by $50 would be such a successful tactic."

It's not just about the price. Don't forget that Macs are the best computers on the market. They simply are. They always work. Macs cost more that Windows PCs because they are better products, higher quality in both hardware and OS. 

With all the latest updates plus the price reduction Apple have made them even more attrative, easier to upgrade to those who are already Mac users, and more affordable to those who always wanted a Mac but the price was holding them back. 

-Susan 

 
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
10/22/2014 | 5:12:09 PM
Smart tactic
I'm surprised dropping the prices of Macs by $50 would be such a successful tactic. But it worked in the end -- 25% increase in quarter-over-quarter sales is impressive. People probably felt like they were getting a deal, that they were joining the Apple VIP club, even though they were still paying hundreds more than they would for a Windows PC. The continued dismissal of Windows 8 I'm sure helped Mac sales as well.
Michael Endler
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Michael Endler,
User Rank: Author
10/22/2014 | 1:47:45 PM
New iMac is evidently a beast
The first benchmark results for the 5K iMac are coming in, and they're pretty impressive.

I'd been a bit worried about how well the CPU-GPU combo Apple chose would handle all those pixels, though the Apple-designed controller made me optimistic that they'd engineered their way around potential problems. That seems to be the case. In some measures, the i7-based version of the new iMac beats the low-end Mac Pro with its Xeon chip, and the GPU seems to be pulling its weight, based on early reviews. I'll be curious to see how the iMac's internals handle heat dissipation over time-- but so far, not bad, all in all.

$2500 isn't a mass market price point, as I said in the article, but this will be a popular item for its class-- and when Retina Displays trickle down to the smaller iMacs and the MacBook Air, I expect healthy consumer adoption.

Premium Windows 2-in-1s and notebooks will also have very nice screens and ultra-slim designs throughout 2015, so there will be some competition. But it remains to be seen how Windows 10 ultimately compared to OS X, whether Windows OEMs can match Apple on build quality, and whether users decide that touchscreens are worthwhile on PCs. It also remains to be seen if gargantuan iPhone 6 sales lead to increased interest in Macs-- a trend that I think is clearly already at play to some extent, and that could become stronger thanks to new features such as Continuity.

If Apple decides to be really agressive, it will leave the current MacBook Airs on the market at even lower prices when it introduces the new Retina MacBook Air. That would let them push the 11-inch to something like $699 while they burn through remaining inventory. Then again, Apple didn't cut iMac prices when it introduced the new 5K iMac (though it did make iMacs more affordable earlier this year).

Anyhow, Apple wanted to make a statement with the 5K iMac, and it seems to have done so. For every review I've seen today that says "iPads are great but unexciting," I've seen another that says, "The new iMac is amazing."
Laurianne
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Laurianne,
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10/22/2014 | 1:18:44 PM
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