The Apple Macintosh: Success In The Era of Handheld Devices

  • Posted: 05 March 2011 09:27 PM

    The Apple Macintosh: Success In The Era of Handheld Devices is my latest posting at Eventide.

    This post completes what has become a three-part thematic review of the revenue and unit growth performance of Apple’s Macintosh line of personal computers. No matter the popularity of the Apple iPhone and Apple iPad, the Macintosh remains an integral component of Apple’s continue revenue and earnings success.

    The post is filled with charts and data tables to satisfy the interests of AFB analysts seeking detailed information on the Mac’s unit sales growth, revenue growth and ASP performance over the most revert nine fiscal quarters.

    Snippet: The Mac’s enduring success is due to both the desktop and portable components of the product line. In FY 2010 the iMac delivered strong year-over-year gains in unit sales while the portable Mac products inclusive of the MacBook Pro and MacBook Air models delivered impressive unit sales gains.  Continued year-over-year growth in Macintosh unit sales is all the more remarkable considering FY 2010 sales of almost 40 million iPhones and about 7.5 million Apple iPads. This fiscal year Apple is on track to sell over 75 million iPhones and increase fiscal year iPad unit sales at least fivefold. Although there are indications the Apple iPad is reducing global demand for Windows-based portable PCs, there are no indications yet the Apple iPad is cannibalizing sales of Apple’s portable Mac products.

         
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    Posted: 05 March 2011 09:47 PM #1

    Thanks for all the hard work!

    Some initial notes and reactions: 

    Q1 2011 desktop growth was tough for me to figure out.  Apple sold more Macs than ever, but desktop revs barely edged up sequentially from Q4 2010 while unit growth edged down.  It was nothing like the Q4 ‘09-to-Q1 ‘10 sequential delta we saw, where desktops had huge growth, and yet the product portfolio on the desktop side (relatively fresh Macs, semi-stale Mac minis, Mac Pro - whatever) didn’t seem all that different.  Maybe it was the MacBook Air effect.

    Also, it could be just me, and the 2009-2010 recession-recovery situation skews things quite a bit, but the 33%-33%-33%-27%-23% string of Mac YOY growth rates from Q1 2010 to Q1 2011 is a potential indicator for slowdown.  I can’t think of any way to explain that sudden trend other than…well, iPad, basically.  Will iPad 2 further pressure Mac YOY growth rates?  Not to say Macs won’t have a great year with 20%-ish growth rates, but the “Post-PC” effect may be more profound that first thought.

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    Thanks, Steve.

         
  • Posted: 05 March 2011 09:54 PM #2

    Mav - 06 March 2011 01:47 AM

    Thanks for all the hard work!

    Mav, thanks for the acknowledgement.  grin

    This post was a lot of hard work and took the better part of two week’s worth of “free time” to research and develop. I’ll be back with comments on your comments a bit later.

    But do consider the success of the Macintosh in light of the slowing growth in domestic PC unit sales, the continuing global price pressure on Windows-based PCs and the continuing consumer migration to handheld devices.

         
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    Posted: 05 March 2011 09:55 PM #3

    Agreeing with Mav’s sentiments, I prefer a 20 % growth instead of a 30 %.    We have 4 dramatic sets of portables in the mix:  iPhone featuring VZ iPhone, iPad 2, MacBook Air, MacBook Pro, not to mention the iPod touch.  Call it round-robin portable cannibalization.  For me, the iPad was the only choice, not any of the others.  For others that I know, iPhone was the first choice.  Later on, a MacBook or an iMac is probable.

    still digesting the big post by DT.

    [ Edited: 05 March 2011 10:02 PM by Tetrachloride ]      
  • Posted: 05 March 2011 11:53 PM #4

    Mav - 06 March 2011 01:47 AM

    Thanks for all the hard work!

    Some initial notes and reactions: 

    Q1 2011 desktop growth was tough for me to figure out.  Apple sold more Macs than ever, but desktop revs barely edged up sequentially from Q4 2010 while unit growth edged down.  It was nothing like the Q4 ‘09-to-Q1 ‘10 sequential delta we saw, where desktops had huge growth, and yet the product portfolio on the desktop side (relatively fresh Macs, semi-stale Mac minis, Mac Pro - whatever) didn’t seem all that different.  Maybe it was the MacBook Air effect.

    Also, it could be just me, and the 2009-2010 recession-recovery situation skews things quite a bit, but the 33%-33%-33%-27%-23% string of Mac YOY growth rates from Q1 2010 to Q1 2011 is a potential indicator for slowdown.  I can’t think of any way to explain that sudden trend other than…well, iPad, basically.  Will iPad 2 further pressure Mac YOY growth rates?  Not to say Macs won’t have a great year with 20%-ish growth rates, but the “Post-PC” effect may be more profound that first thought.

    The domestic PC market is in a state of economic decline. Further, advancements in chip technology (specifically multi-core processors) has extended the useful life of PCs in the home and in enterprise. Apple’s most fruitful (pun intended) markets for the Mac are in international regions previously underserved. I don’t see the Q1 numbers as indicative of a slowdown. Product refreshes factor heavily into quarterly unit sales results.

         
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    Posted: 06 March 2011 12:01 AM #5

    We’ll see.  Of course, if Apple’s business in China continues to pick up as it has, Mac sales will accelerate.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
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    Thanks, Steve.

         
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    Posted: 06 March 2011 12:30 AM #6

    Mav - 06 March 2011 04:01 AM

    We’ll see.  Of course, if Apple’s business in China continues to pick up as it has, Mac sales will accelerate.

    If China ever gains momentum, Apple will have serious supply issues.

    Great work DT, you sure are making things easy for us, much appreciated. :innocent:

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    Posted: 06 March 2011 01:01 AM #7

    DT

    Thanks for all the hard work putting this together.

    Who would have thought 3-4 years ago that Mac revenue would be only 20% of the total pie?

      much appreciated
        JohnG

         
  • Posted: 06 March 2011 02:25 AM #8

    johnG - 06 March 2011 05:01 AM

    DT

    Thanks for all the hard work putting this together.

    Who would have thought 3-4 years ago that Mac revenue would be only 20% of the total pie?

      much appreciated
        JohnG

    What’s interesting is that Mac sales have continued to rise and this fiscal year revenue from Mac sales will be well above $20 billion. It’s only in the shadows of the iPhone and now the iPad that the success of the Mac isn’t coming to light.

         
  • Posted: 06 March 2011 04:55 AM #9

    Tetrachloride - 06 March 2011 01:55 AM

    Agreeing with Mav’s sentiments, I prefer a 20 % growth instead of a 30 %.    We have 4 dramatic sets of portables in the mix:  iPhone featuring VZ iPhone, iPad 2, MacBook Air, MacBook Pro, not to mention the iPod touch.  Call it round-robin portable cannibalization.  For me, the iPad was the only choice, not any of the others.  For others that I know, iPhone was the first choice.  Later on, a MacBook or an iMac is probable.

    still digesting the big post by DT.

    Tetra, you make an interest point. The mutual halo effect among Apple products will have a beneficial impact on Mac unit sales. Device integration provides for powerful appeal and the ability to share purchased resources among multiple devices is a clear winner. The Mac app store is a significant step forward in making the platform more attractive to new users.

         
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    Posted: 06 March 2011 11:03 AM #10

    Mav - 06 March 2011 01:47 AM

    Thanks for all the hard work!

    Some initial notes and reactions: 

    Q1 2011 desktop growth was tough for me to figure out.  Apple sold more Macs than ever, but desktop revs barely edged up sequentially from Q4 2010 while unit growth edged down.  It was nothing like the Q4 ‘09-to-Q1 ‘10 sequential delta we saw, where desktops had huge growth, and yet the product portfolio on the desktop side (relatively fresh Macs, semi-stale Mac minis, Mac Pro - whatever) didn’t seem all that different.  Maybe it was the MacBook Air effect.

    Also, it could be just me, and the 2009-2010 recession-recovery situation skews things quite a bit, but the 33%-33%-33%-27%-23% string of Mac YOY growth rates from Q1 2010 to Q1 2011 is a potential indicator for slowdown.  I can’t think of any way to explain that sudden trend other than…well, iPad, basically.  Will iPad 2 further pressure Mac YOY growth rates?  Not to say Macs won’t have a great year with 20%-ish growth rates, but the “Post-PC” effect may be more profound that first thought.

    During that period of slight decline, Apple stopped advertising the Macs with those clever ads on TV; I wonder if that alone could account for the change?

         
  • Posted: 06 March 2011 01:34 PM #11

    firestorm - 06 March 2011 03:03 PM

    During that period of slight decline, Apple stopped advertising the Macs with those clever ads on TV; I wonder if that alone could account for the change?

    The ads were clever, but the desired outcome had been achieved. Ib FQ1 portable sales shot up 37%. It’s the performance of desktop Macs that brought the growth percentage down. Product refreshes are very important along with the opening of new retail stores.

         
  • Posted: 06 March 2011 02:06 PM #12

    Great work DT! I love this topic. I know there is some cannibalization due to iPad (because I’m a single data point on that grid), but the halo is a more important influence overall. iPad will replace and defer desktop and laptop purchases, but within this slowing market I’m confident that Mac market share will continue to expand. I think we’ll cross the 6 million Mac quarter in 24 months.

         
  • Posted: 06 March 2011 02:32 PM #13

    cranium - 06 March 2011 06:06 PM

    Great work DT! I love this topic. I know there is some cannibalization due to iPad (because I’m a single data point on that grid), but the halo is a more important influence overall. iPad will replace and defer desktop and laptop purchases, but within this slowing market I’m confident that Mac market share will continue to expand. I think we’ll cross the 6 million Mac quarter in 24 months.

    carnium, I’m researching the distinct possibility the Apple ipad’s halo effect (and the mutual halo effect among Apple products) may actually boost Mac unit sales. In other words the halo effect will lead to a net unit sales gain no matter some cannibalization of Mac sales by the Apple iPad.

    From the data developed for my post titled Apple Retail Stores: Macintosh Sales Centers And More I see strong evidence the Apple iPad is creating retail store foot traffic and the retail stores are critical to Mac unit sales growth. Further, device integration (I may touch on that issue this week) is also a boost to Mac unit sales. I think the Mac app store will become a draw to the Mac as well.

         
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    Posted: 06 March 2011 02:47 PM #14

    Solid analysis DT!

    If it wasn’t perfectly evident to everyone during the March 2nd event, Apple is going to let the world know, we are NOW in a “post PC” era so get on board.

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  • Posted: 06 March 2011 03:17 PM #15

    adamthompson3232 - 06 March 2011 06:51 PM
    afterglow - 06 March 2011 06:47 PM

    Solid analysis DT!

    If it wasn’t perfectly evident to everyone during the March 2nd event, Apple is going to let the world know, we are NOW in a “post PC” era so get on board.

    This terminology from SF is brilliant. As the world absorbs this Apple and AAPL are going to gain more and more traction. The phrase itself tells us everything we need to know about who the next big winner is going to be.

    For years I’ve said “the PC-centric era” is over. Apple is essentially making good (ten years later) on some of the foundational attributes of Mac OSX versus what’s offered by Windows and even Android. Device integration is key to success and Google has its hands full attempting to develop a strategy that can compete with Apple’s multi-device product paradigm.