Apple's Mac Surge: 4 Observations - InformationWeek

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10/22/2014
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Apple's Mac Surge: 4 Observations

Apple's record-breaking Mac sales last quarter were a surprise -- but 2015 could be even bigger.

10 Elegant Product Designs, Not By Apple
10 Elegant Product Designs, Not By Apple
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however, so Apple's actual share is likely somewhat higher. A recent US survey concluded Macs accounted for nearly 27% of consumer PC sales during the back-to-school period.

2. Mac sales validate Apple's recent product strategy.
Earlier this month, Apple released its eye-popping 5K iMac, but other 2014 Mac refreshes have been much more modest, limited somewhat by Intel's manufacturing problems and the subsequent delay of next-generation processors.

The incremental Mac updates might seem uninspiring, but Apple wisely cut prices when it announced this year's refreshed models, effectively giving customers more power for less money compared to last year's offerings. The company also introduced a lower-cost iMac.

Because of the new prices, Macs' average selling price dropped by about $50 compared to the previous quarter. But the tactic led to a 25% quarter-over-quarter increase in sales. Macs also, as mentioned, still cost hundreds of dollars more than Windows PCs. For Apple, a loss of $50 per sale must seem pretty trivial, given that the tradeoff has been utter domination of the high-end, high-profit PC market.

3. Apple's momentum will probably continue.
As strong as Mac sales have been in 2014, 2015 could be even bigger. Apple will continue to enjoy the benefits of its new pricing strategy throughout the holidays. Then, sometime in the first half of 2015, the company will likely introduce its long-rumored MacBook Air with Retina Display. Unless Apple goes truly gonzo with pricing, strong sales will surely follow. MacBook Pros are also due for a more substantial refresh, having received relatively mild spec bumps in 2014.

With a $2,500 base price, the 27-inch 5K iMac isn't exactly a mass-market item, but it's still destined to become a favorite among creative professionals and resolution fetishists. Retina-level versions of Apple's smaller iMac will likely arrive late next year with a more affordable price. The Mac Pro, meanwhile, will probably get an upgrade, too, with new Xeon chips that support DDR4 RAM and next-gen Thunderbolt ports. It might arrive with a 5K Cinema Display based on the iMac's screen.

This potentially becomes interesting for Windows and its base of business customers. Windows will remain a major enterprise force for a variety of reasons, but Macs have become more common in the enterprise over time, with BYOD efforts accelerating Mac growth in recent years. In a recent InformationWeek survey of 330 business technology professionals, 32% of respondents indicated their organizations support OS X. Windows PCs still outnumber Macs in many of these environments, but with Windows 10 still many months away, the conditions might be right for Macs to expand even more.

4. Apple probably won't release any touchscreen Macs in 2015. Probably.

Windows OEMs continue to embrace touch-enabled PCs, but Apple has remained resistant to the concept. Don't expect that to change, according to Apple senior VP of software Craig Federighi.

Federighi told CNET this month that Apple has experimented with touchscreen Macs, but execs concluded "it just wasn't any good." He said Apple remains focused on building industry-leading trackpads, and that OS X and iOS should remain related but distinct. Apple execs have frequently argued that touchscreens are awkward for desktop use and that PC gesture input is best left to trackpads.

Then again, what Apple likes today isn't always what Apple likes tomorrow. Steve Jobs famously bashed both large phones and small tablets, but Apple now makes both. Federighi said touch won't come to OS X, but perhaps a little bit of Mac-style productivity could come to iPads. Apple is expected to release the so-called "iPad Pro" with a 12.9-inch screen sometime in 2015.

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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Alison_Diana
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Alison_Diana,
User Rank: Author
10/24/2014 | 2:30:26 PM
Re: Apple's Mac Surge
Many years ago I worked at a publication called Macintosh News and started a project with the University of Miami, where we were tracking students to see whether they went on to use Macs in the office after being exposed to them at school. Sadly, the publication folded and the project ended but it's interesting to see somewhat anecdotal suggestions that my theory (and Apple's theory) was right.
Lorna Garey
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Lorna Garey,
User Rank: Author
10/23/2014 | 5:28:03 PM
Re: Apple's Mac Surge
It also comes down to what you're used to. I find Windows easier to navigate because it's what I learned on. I use a Mac sometimes for work but just don't find its UI all that intuitive for things like connecting to a remote network. Small things like Ariel not rendering properly in Chrome -- or that spinning candy wheel with no ctrl/alt/delete/task manager/KILL PROCESS -- annoy me. Now, maybe someone who uses a Mac all the time could fix these problems easily, but to me it's a time suck.
Michael Endler
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Michael Endler,
User Rank: Author
10/23/2014 | 3:18:54 PM
Re: Apple's Mac Surge
@steve

My experience is similar. Both as an undergrad and grad student, I saw far more Apple computers than anything else. I always pay attention to what kind of devices people are using when I go to libraries, cafes and universities, and the vast majority of the time, MacBooks outnumber other PCs. This is definitely true around the Bay Area but also seems to be true when I go out of town. It's also true at  media and developer events-- way, way more Macs than anything else. The only times I see more Windows devices are at Microsoft conferences. At Monday's Azure event, I think I was the only reporter toting around a Surface. Everyone in my row had some kind of MacBook, except for one journalist who managed to do all his work with an iPad.

Despite my observations, the state of the economy reminds me that Macs must trail Windows by a pretty far margin in overall consumer market share. But I think a lot gets lost in translation if you just look at market share. Who buys computers and why is also a big factor when it comes to describing markets. As far as I can tell, when people are in financial position to choose, they choose Macs at an impressive clip.
Michael Endler
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Michael Endler,
User Rank: Author
10/23/2014 | 11:48:00 AM
Re: Apple's Mac Surge
@zerox,

Thanks for the comments.

Good point.  It's likely some new Mac owners, especially consumers, made their purchases as much due to Windows 8's poor reputation as to Apple's lower prices-- definitely true, and something I could have discussed more explicitly in the article.  

I don't think it's disingenuous to say Apple is dominating the high-end market, though. Apple's PCs sell for hundreds of dollars more than Windows models do and Apple generates much more profit from computers than any competitor. Apple also gets virtually all of its market share from "the high end," even with the price discounts. Expensive Windows models such as new 2-in-1s account for a relatively tiny portion of recent Windows sales, based on survey data.  There are many more Windows options below $1000 than there are Apple options under $1000, but I wouldn't say Apple "doesn't have any competition in this niche." Perhaps I don't understand which niche you're referring to-- but there are plenty of $1000+ Windows PC configurations available, so in that sense, Apple does have direct competition within its chosen markets. Apple just happens to have more momentum than the rest of the field, the presence of cost-comparable alternatives notwithstanding.
Michael Endler
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Michael Endler,
User Rank: Author
10/23/2014 | 9:28:59 AM
Re: Smart tactic
@Shane,


Actually, the math is sort of interesting. On average, Apple lowered prices by much more than $50. The fact that average sales price only dropped $50 suggests that Apple's sales mix actually shifted upward, toward more expensive models. Perhaps the new, lower base prices encouraged more buyers who would have bought base models to go with the mid-tier options instead. Or perhaps people who would have bought mid-tier models decided to splurge on the high-end models. Apple is playing with vaguely similar strategies with its iOS devices-- e.g. using storage configurations to encourage more people to buy at least middle-tier iPhones.
Susan Fourtané
IW Pick
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Susan Fourtané,
User Rank: Author
10/23/2014 | 1:50:22 AM
Re: Smart tactic
Shane, 

"I'm surprised dropping the prices of Macs by $50 would be such a successful tactic."

It's not just about the price. Don't forget that Macs are the best computers on the market. They simply are. They always work. Macs cost more that Windows PCs because they are better products, higher quality in both hardware and OS. 

With all the latest updates plus the price reduction Apple have made them even more attrative, easier to upgrade to those who are already Mac users, and more affordable to those who always wanted a Mac but the price was holding them back. 

-Susan 

 
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
10/22/2014 | 5:12:09 PM
Smart tactic
I'm surprised dropping the prices of Macs by $50 would be such a successful tactic. But it worked in the end -- 25% increase in quarter-over-quarter sales is impressive. People probably felt like they were getting a deal, that they were joining the Apple VIP club, even though they were still paying hundreds more than they would for a Windows PC. The continued dismissal of Windows 8 I'm sure helped Mac sales as well.
Michael Endler
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Michael Endler,
User Rank: Author
10/22/2014 | 1:47:45 PM
New iMac is evidently a beast
The first benchmark results for the 5K iMac are coming in, and they're pretty impressive.

I'd been a bit worried about how well the CPU-GPU combo Apple chose would handle all those pixels, though the Apple-designed controller made me optimistic that they'd engineered their way around potential problems. That seems to be the case. In some measures, the i7-based version of the new iMac beats the low-end Mac Pro with its Xeon chip, and the GPU seems to be pulling its weight, based on early reviews. I'll be curious to see how the iMac's internals handle heat dissipation over time-- but so far, not bad, all in all.

$2500 isn't a mass market price point, as I said in the article, but this will be a popular item for its class-- and when Retina Displays trickle down to the smaller iMacs and the MacBook Air, I expect healthy consumer adoption.

Premium Windows 2-in-1s and notebooks will also have very nice screens and ultra-slim designs throughout 2015, so there will be some competition. But it remains to be seen how Windows 10 ultimately compared to OS X, whether Windows OEMs can match Apple on build quality, and whether users decide that touchscreens are worthwhile on PCs. It also remains to be seen if gargantuan iPhone 6 sales lead to increased interest in Macs-- a trend that I think is clearly already at play to some extent, and that could become stronger thanks to new features such as Continuity.

If Apple decides to be really agressive, it will leave the current MacBook Airs on the market at even lower prices when it introduces the new Retina MacBook Air. That would let them push the 11-inch to something like $699 while they burn through remaining inventory. Then again, Apple didn't cut iMac prices when it introduced the new 5K iMac (though it did make iMacs more affordable earlier this year).

Anyhow, Apple wanted to make a statement with the 5K iMac, and it seems to have done so. For every review I've seen today that says "iPads are great but unexciting," I've seen another that says, "The new iMac is amazing."
Laurianne
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Laurianne,
User Rank: Author
10/22/2014 | 1:18:44 PM
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