Apple Shows Weakness In PC Market

Apple's determination to remain a premium PC vendor has led to a significant drop in shipments in the second quarter, as consumers turned to lower-priced computers in tough economic times, an analyst firm said.

IDC on Wednesday reported that Apple, which the market researcher lists as the fifth-largest computer maker in the United States, saw Mac shipments fall 12.4% from the same period a year ago to 1.2 million units. Apple's market share fell nearly 1% to 7.6%.

PC makers in general ship fewer computers in the first and second quarters than during the rest of the year, which typically has higher sales because of the back-to-school and holiday seasons. However, the latest figures indicate that Apple is feeling the effects of being a high-end PC maker during a recession.

"Apple's cheapest notebook is $999, and most of the market is focused on products that are below $999 -- in the $700 to $800 range," IDC analyst Bob O'Donnell told InformationWeek Thursday. "Apple doesn't play in that market."

Because of the tough economy, consumers have been buying low-cost PCs, most of them notebooks or smaller netbooks. As a result, Acer, a leading low-cost computer maker, saw a 23.7% increase in shipments in the quarter worldwide and a 51% rise in the United States, according to IDC.

Apple, on the other hand, is "overshooting the market" with its higher prices. "A lot of people are perfectly content with less-capable machines, because they are good enough," O'Donnell said.

IDC acknowledges that the number of Mac shipments attributed to Apple is an estimate. Unlike other vendors in the analyst firm's report, Apple does not provide any numbers related to shipments until it releases earnings. IDC bases its numbers on the information it gets from Apple's contract manufacturers, O'Donnell said. "Unlike the other vendors, Apple shares nothing."

As a result, IDC's estimate is considerably different from rival Gartner's. The latter firm on Wednesday released preliminary results from its analysis of PC shipments that showed Apple Mac shipments rising by 2.5% in the quarter, while its market share dipped a third of a percentage point to 8.4%. Gartner also lists Apple as the fourth-largest PC maker in the United States.

Nevertheless, there are signs that Apple is feeling competitive pressure from makers of Windows PCs. Microsoft claims that its new ad campaign touting less expensive PCs has been so effective that Apple lawyers called to complain that the ads were inaccurate.

"You know why I know they're working?" Kevin Turner, chief operating office for Microsoft, said of the ads Wednesday at the company's Worldwide Partner Conference. "Because two weeks ago we got a call from the Apple legal department."

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