Fortune: Apple's Hottest Product is Computers

by , 2:00 PM EDT, August 22nd, 2007

Apple's computers are emerging as the hottest part of the company's product profile, according to Fortune Magazine on Wednesday. That comes as many had previously worried that when Apple dropped the word "computer" from its official name at Macworld 2007 that it signaled a reduction in Apple's commitment to computers.

In fact, the company name change seemed to offer somewhat of a concession. For over a decade, Apple couldn't seem to crack the 5 percent mark of computer sales in the U.S., or 3 percent world wide.

Recent data from IDC, however, has shown a remarkable turn around recently. In the quarter ending in June, Macs accounted for the majority of Apple's revenue, and their share of the U.S. computer sales is now above 5 percent thanks to sales growth triple the rest of the PC industry since last fall.

Supporting that, according to NPD data, Apple is now in third place overall amongst PC makers, behind only Dell and HP, with 5.9 percent market share. A year ago, it was 4.8 percent. Apple's notebook market share is much higher, 17.6 percent, compared to 15.4 percent a year ago.

Apple has done this by focusing on their strength: the personal personal computer, an emerging tool in the modern, mobile, entertainment driven technology market.

The effect of Apple's retail stores, their music business, and the iPhone seems to have propelled Apple's awareness and business amongst those with sole purchase authority, in contrast to corporate IT departments which buy computers for their employees and dictate use. That's always been true, but when Apple only sold niche computers, the public awareness of the company was not there to propel sales.

Other factors have come into play, especially the Intel transition which makes running Windows almost a no-brainer for Macintosh customers. Perhaps most important of all, is the energy within Mac OS X.

"Apple's software could turn the Mac into a phenomenon again, perhaps even in corporations. Apple is arguably the best software company on the planet, regularly releasing basic operating system software and application programs that reveal the greater potential of computers as devices for communication, creativity and entertainment. Most of Apple's software gets an overhaul every few years and is constantly freshened with free, easy, online upgrades that improve performance," concluded Brent Schlender.

The lesson: improve your hardware and software faster than the competition and focus on the consumer market where people are free to chose the best. That seems like a good idea, but it might never have paid off unless Apple had developed the iPod, iTunes and the iPhone.