The Future of the Mac Will be Far Better Than Expected

| Particle Debris

Image Credit: Apple

Needham analyst Charlie Wolf notes that Macintosh sales appear to defy the laws of economics. That is, while PC prices have gone down and Macs became relatively more expensive, Mac market share has increased.

There are several obvious reasons for this. PCs have historically been very difficult to manage for home users. OS upgrades have been so difficult and expensive, a new OS is obtained only (and often grudgingly) with the purchase of a new PC. That primed the pump of disgruntlement.

Then, in 2010, the iPad ushered in the post-PC era causing PC sales to eventually plummet. Meanwhile, iPhone and iPad buyers who needed a PC-type of product figured that if Apple can do such a good job with those iOS products, a Mac is a good thing to look at as well. Apple's retail stores make that easy. It's the reverse halo effect.

The fact is, a notebook or desktop computer is still a necessity for many users. Not all, but many. This type of computing device can have a large display, perhaps two, and make life easier for many kinds of creative and management tasks. The question is, what's a good choice for those kinds of activities? A Mac does a great job and is pleasant to use. It exudes quality plus simplicity, and guess what? They're on majestic display right next to the iPads and iPhones in a local Apple store.

I think the bigger question is where this is all this leading? I surmise that the PC vendors, without growth, are dismayed. There's no money to be made selling PCs these days, and so only those who have a viable foreign market like Lenovo can make good money. Everyone else in the U.S. will, I believe, eventually throw in the towel for financial reasons.

In contrast, Apple has a built-in profit mechanism in the Mac. Apple is dedicated to making the best, and as the article linked to above points out, the average Mac price is US$700 more than competing machines. Apple has no financial incentive to stop making Macs.

Moreover, because the Mac can still do things that at standard iPad cannot do, there's no sign that Apple wants to eviscerate the Mac by turning it into some kind of super hybrid tablet. Here's the story on that: "Phil Schiller Says Merging OS X And iOS Would Be A ‘Waste Of Energy’" That's a comforting perspective by Mr. Schiller.

As a result, the Mac as we know it can be expected to be more and more useful to users who have opted for Apple products and Apple continues to make good money selling them. A steadily advancing, focused and free OS X makes the proposition even more compelling. Look to the late 2013 Mac Pro for Apple's sense of direction. I think that at some point, in a few years, when the PC market is in really bad shape, (and even Proctor and  Gamble is selling its own tablet) one in four or even one in three PCs sold in the U.S. could be the super Mac of the future.

And it will be a sight to behold.

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Comments

aardman

“PCs have historically been very difficult to manage for home users. OS upgrades have been so difficult and expensive, a new OS is obtained only (and often grudgingly) with the purchase of a new PC.”

I can only speak for myself but that is so true.

heretiq

Ditto! My first Mac purchase was a MacBook Pro—this was driven by the need to replace a heavy Compaq work laptop (that was proven to be the cause of repetitive stress/inflammation-driven chest pains) with a lighter, but equally powerful machine. After three months of using my new MBP with Parallels Desktop I realized that I was no longer spending 1 to 2 hours every other week on PC maintenance (defragging, virus/malware scanning and removal, etc.) for my work PC; but I was still doing it for the four other family PCs in my home. After realizing this I began to systematically look for opportunities to replace home PCs with Macs. First an iMac to serve as the “communal” PC, then a MacBook Air followed by a MacBook Pro and a plain MacBook. In a span of 8-months, I went from spending hours on “PC maintenance” each weekend to less than 1.5 hours a quarter on maintenance tasks. The liberation of life energy to more useful purposes is perhaps the most under-recognized benefit of the Mac over Windows-based PCs.

Paul Goodwin

“the average Mac price is US$700 more than competing machines.”  Competing being the keyword here.

Not sure that’s accurate. When you add up the total purchase cost of the machines with similar materials, specs, and build quality, then add in the virus protection costs (the reputable ones that actually work), and the cost of the extra software that does what Apple’s does and includes, the costs aren’t much different. Every time I sit down and do the math, the extra cost of buying a Mac over the PC is only a few of dollars a month. Only the PCs with hundreds of 2 and 3 star reviews are significantly cheaper, and those typically have 20-25% of their ratings as 1-star. That’s where a significant portion of the disgruntlement comes from. The buyers think they’re getting a great deal, and all they are getting is the junk of the electronics world. A significant number of buyers have figured this out over the past 1/2 decade.

Paul Goodwin

Good post heretiq.

ellsab

Fully agree, my brother for years said Apple hardware too expensive, etc, etc, I would always argue for Mac, he would push PC
Last year was gold!  He sent a text after researching same spec machine, it was actually cheaper to get the Macbook Air to run windows on.
He was then going to only try MacOS for a few weeks then convert to Windows, after a month or so I received another text, he was going to leave MacOS on after all!!
People buy Apple because they know they are getting quality! ‘Heretiq’, so so true, the amout of hours of fixing, reinstalling, updating, viruses, all vanishes once you buy a Mac, I have a 2007 iMac running Mountain Lion 10.8, it works just as fast as it did when I upgraded way back in July 2012!

Bosco (Brad Hutchings)

Defies the laws of economics? My word. We’re talking about a niche that increased from 2% to 5% of a shrinking market over 5 years, with unit sales bumping a respectable 10% year over year. This would be more accurately described as cherry-picking a chart.

It’s kinda like when you’re treading water in a cool lake and you pee. The water closest to you is kinda warm for a bit. I suppose that defies the laws of thermodynamics?

Paul Goodwin

Except that Apple is peeing on their competitors before they jump in the lake. Apple makes as much profit from Mac sales as the sum total of all the other vendors combined, and more importantly, the percentage is getting bigger. Yes, their global sales is only about 5% of the market! but the total sales in that market are huge. A 1% increase is like 3.2 million units a year. BTW, Apple’s US sales 4th Qtr 2013 are at about 14% of the total, up from 10% the year before.

wab95

John:

I enjoyed reading your observations and musings on the future of the Mac and other things Apple.

It made me reflect on the changes I’ve seen, not just in my profession, but literally around the planet as I travel across most continents (so far, not Antarctica, but probably because they haven’t had a severe respiratory disease outbreak there - amongst humans) and more countries than I can recall, I see more and more Macs in play, particularly amongst those in decision-making positions. Indeed, my wife complains, facetiously, that it is a reflection of the lack of value assigned to her role at work with one of the university affiliates (despite her being a lawyer) that they supply her with a Dell and not a Mac (she insists on calling it a ‘Dull’). Most of my colleagues have switched to Macs, and those who have not have begun to seriously talk about doing so, particularly given the stresses to which they’ve been subjected with MS’s recent struggles with Windows. I think it was a wake-up call to many of my overseas colleagues at a research facility when the IT department forbade the upgrading to Windows 8 and recommended sticking with older Windows versions, including XP (which I still have on my MBP, and only use in order to log into a Windows proprietary management information system about 3 - 4 days per week). Unfortunately, that facility, largely due to logistical and cost constraints, will not purchase Macs for anyone except their publishing and graphics crew, although I have seen more senior management with Macs, and certainly any scientist who can afford it on their budget codes.

What many critics have never quite figured out, although the competition including the good people in Redmond have, is that ordinary consumers, and not just the elite professionals and the power users, delight in using their Macs, and not only their Macs, but their iOS devices as well. This was @ellsab’s point above.

Similarly, a relative of mine, in university, was overjoyed when I sent her my 3rd gen RD iPad a couple of weeks ago, after I upgraded to the iPad Air. I had previously sent her an older MBP (2007 vintage) for her studies - her first Mac - and now she couldn’t wait to get the iPad. How many youth are thrilled to get a 2 year old piece of tech, let alone a 7 year old piece of tech (assuming it still even powers up) and absolutely love it? Are converted to its use? Become advocates? Want more?

My mum, now retired, has been the recipient for the past few years of my hand-me-down laptops (although my son got the last one). These, despite their relative age (about 18 - 20 months when they passed down, so by no means ancient), are top-end machines, so are competitive years out. Nonetheless, in my routine weekend call when I am on this side of the planet (otherwise my mum Skypes me daily to make sure I’m alive and well - mums, what more needs to be said?), said that she now wants to upgrade to a lighter laptop as well as upgrade her iPhone. Mind you, this is a lady who will ask me where did the icons disappear to when we’re on Skype, and I have to remind her that all she need do is move her cursor over the Skype window, so a power user she is not, nonetheless, she is enthusiastic about her Mac and iOS devices, and wants to keep them up to date. She simply enjoys using them. I counselled her, BTW, to hold off the iPhone upgrade until the iPhone 6 (she has a 5) which will be coming late summer or fall, as well as hold off on the laptop, as the new MBAs will likely get refreshed this summer and sport Retina Displays - well worth the wait if true.

One just does not see such enthusiasm or thirst in the non-Apple world, certainly not for PCs. Nor is it for want of trying. It’s not merely that Windows PCs don’t inspire enthusiasm, they simply don’t inspire. These are commodity work tools in the workplace. They’re what get assigned to you. My own view is that that relationship is in no small measure to blame, at least in part but substantially so, for the lack of consumer enthusiasm for the product. It’s not simply a reminder of the workplace (one could argue the same for my MBP for instance), but more importantly and unlike my MBP, that ‘choice’ - that sacred exercise of human volition - was never part of the equation; ergo, for too many people, the Windows PC is equated with the absence of choice in a place of toil. Hardly a recipe for enthusiastic private consumer uptake. One might consider adding this to Rocco Pendola’s piece on how Apple could become a ‘hated company’ - force the use of Macs onto those who don’t want them, something I trust will never happen, not so long as Asian OEMs continue to crank out cheap PCs.

Very thoughtful picks amongst your reading list this week.

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