Analyst: Portability Driving Apple Sales

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Apple's record breaking first quarter earnings were driven by the company's portable devices, namely the MacBook and iPhone 3G, and not desktop computers, and TBR analyst Ezra Gottheil expects that trend to continue.

"Apple's desktop revenues, dominated by the iMac, fell 31 percent year to year, and iPod revenues decreased 16 percent," Mr. Gottheil said. "Desktop revenue growth was affected by tightened school district budgets, and spectacular sales in the year-ago quarter, but the main reason for the decrease, TBR believes, is the decline of the desktop PC, especially in the consumer market."

Many consumers now prefer owning a laptop computer in conjunction with a desktop display, external keyboard and a mouse, giving them the benefits of a desktop machine along with the portability that comes with a laptop-based machine, according to Mr. Gottheil. It's "the ideal configuration for many users," he said.

Desktop Mac dropped in part because of the weakening PC market, while iPod sales dipped due to market saturation and iPhone cannibalization. Other than the iPod touch, Mr. Gottheil sees the portable digital media player market as stagnant.

Looking forward, he thinks Apple will need to lower its iPhone price point. "Because the smartphone market is price-sensitive, Apple will eventually reduce entry prices for iPhones to maintain sales, but with network provider subsidies of approximately US$400 per unit, TBR believes the company can maintain very strong margins despite price reductions," he said.

He added "TBR believes Apple will continue to introduce cutting edge products, retaining its brand identity and its loyal customer base in a difficult market."

Apple is currently trading in the pre-market at $89.70, up 6.87 (8.29%).


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Everyone likes to point out the shift to portables, but I sometimes wonder whether or not more people are buying portables because they like portables or because Apple’s desktops are lacking.

Consider that you haven’t seen an update to the Mac mini or the Mac Pro in over a year.  You haven’t seen an update to the iMac in 9 months.  Especially in regards to the Pro, why in the world would I spend $3000 for last year’s technology?

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