The extraordinary thing about Macs is its ability to convert sales into profit — no other computer manufacturer does it as well as Apple. For every $100 worth of computer that Apple sells, Apple makes $19 of profit whereas competitors are lucky to make $4. That’s more than 4x the margin, which is amazing.
PC makers feel the sting, but Macs still comprise less than 7% market share so Microsoft hasn’t felt the same kind of pressure. The Redmond company soon will, however. In Apple’s latest quarterly report, Macs grew 21% compared to the previous year’s quarter, over a time when the overall PC market is flat. Apple hasn’t done as well since 1995.
Apple has traditionally focused on the high end market; but more and more, Apple has been willing to compete in the middle. That’s why Apple is still selling the the non-retina MacBook Pro, the original iPad mini and the iPhone 5C, even though those products aren’t likely to garner the same high customer satisfaction scores that Tim Cook often brags about.
While Mac units shipped grew 21%, revenue only grew 18% — evidence that the average selling price of Macs sold has declined. This is a signal that Apple intends to grab market share.
It’s a perfect storm for the Mac. Apple’s success in the iPhone and iPad casts a halo effect on Macs. As people become invested in Apple’s ecosystem, it increasingly makes more sense to get a MacBook than a Windows laptop. Now that the computer market is mature, the apps the average consumer needs (Office, light image editing, media player, etc.) are readily available on both platforms; especially since the killer app, the Internet, is inherently cross-platform.
The result is Windows’ compatibility is no longer required.
Without that lock-in, consumers will choose on other things: brand, aesthetics, build quality, so on. These are Apple strengths. Especially brand, and especially for a younger demographic who will continue to purchase Mac computers as they get older.
Unless Microsoft and its PC partners get their act together, they will continue to cede market share. They’ve already lost the high end and they can easily lose the middle.