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Americans want better PCs for the dollar, HP and Dell outgrew Apple

Now that 2014 has come to a close, we can definitively say that the PC market has turned around in the US, growing 5% after years of decline.

Without much category competition, PC innovation grew stagnant over the decades. Then tablets came and easily beat PCs that catered to low cost, light computing needs. PC makers tried new things, but the technology wasn’t ready. New, experimental devices were either too heavy, too slow, too short on battery life or too expensive. Windows 8’s bad reputation certainly didn’t help.

2014 was a comeback because the entire PC value curve shifted upwards significantly. You got far better PCs for a given price, and customers — now used to great smartphones and tablets — demanded and expected quality. Only the top PC makers met that expectation.

Meanwhile, the tablet form factor saw little change so naturally, it made sense for customers to upgrade their old PCs for a dramatically better experience. The tablets they already had were just fine.

Now that we are on the brink of “good enough” convergence between PCs and tablets, I expect the hybrid form factor to grow even more as people seek to save money and do work on their tablets.

Last year, I consistently beat the gong for big display smartphones, and that was before the iPhone 6 and 6 Plus made the notion popular. This year I am beating the gong for hybrid devices.

Well, that was a longer lead-in than I expected to write. On with actual numbers from IDC.

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New 12-inch MacBook Air shows Apple still ballsy

Let’s talk about the new, 12-inch MacBook Air. Typically, I don’t comment on speculation but 9to5mac seems confident about their information. Anyway, this isn’t about the MacBook Air per se and more on how Apple is still willing to take big risks — which is fantastic — and about their view on computing.

Here’s the quick rundown on those MacBook Air rumors:

  • 12-inch display in an extremely compact design
  • One USB Type-C port, one headphone port and…that’s it for ports
  • Smaller than standard keyboard
  • Trackpad has no mechanical key

The Type-C port, in addition to its typical USB functionality, is also capable of powering the laptop and driving displays. The thinking is that one port will be used for all those things and via hub when needed.

This is a risky design. The Type-C port will break easy compatibility with accessories, similar to the lightning port for iPhone and iPad, and will surely piss some people off. The smaller keyboard may annoy Apple lifers. Removing the mechanical key on the trackpad means the likelihood that a touch is misinterpreted as a tap is higher.

So why do it?

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Macs will take more share from Windows

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.

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Great design doesn’t differentiate Apple

Didn’t know what to write today, and then @nilanp came to save the day:

My answer to that is great design is everywhere. Lots of tech companies have great design. The problem is not everyone cares.

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Future of tablets is >13 inches at <1.5 pounds weight

The Wall Street Journal is reporting some interesting Apple rumors:

  1. The existence of 12.9-inch iPad Air Pro (now delayed to early 2015)
  2. The existence of a new, 12-inch MacBook Air (production starts this December)
  3. The continued struggle to make enough iPhone 6 Plus supply, a factor that no doubt contributes to the popularity of the easier-to-get iPhone 6

Think about that for a second. Apple is going to release a tablet with a bigger screen than the newest generation of its most popular laptop!

It looks like Apple just might share my vision for a large, light, 15-inch tablet that can be used for work and play and that will prove to be the single most popular computing device.

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Macs are amazing but not for the reasons you’re thinking about

Mac computers have been steadily eating away at Microsoft’s share of the PC market the past few years; enough so that Panos Panay appointed the MacBook Air as the Surface Pro 3’s competition.  As PCs become increasingly lifestyle products, the Mac will continue to gain share.

When we say Macs are amazing, you’re probably thinking about its sexy look and premium finish; it’s proprietary software; it’s reputation for reliability (sometimes undeserved); the slick commercials; the aspirational Apple brand; or perhaps even unwarranted PR hype.

But you’d be wrong.  The most amazing thing about the Mac isn’t all those things, things that drive market demand; it’s Apple’s peerless ability to convert demand into profit.  And that’s about good old fashioned operations.

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The only meaningful advantage Chromebooks have over Windows laptops is price

The narrative is that Chromebooks are disrupting Windows PCs.  Forbes: “Here’s why Microsoft is worried about Google Chromebooks.” The Verge: “The Chromebook is just a better device.” WSJ: “Google’s winning over some businesses.” The Street: “Why Google’s Chromebook is better than Windows, Mac and Android.”

Let’s run with the assumption that Chromebooks are doing well and compete with laptop PCs. Advocates claim non-tech savvy consumers choose Chromebooks for generally three reasons: 1) simplicity, 2) low maintenance and 3) easy usage in its fast start-up times. I disagree. People with low computing needs don’t buy Chromebooks because they are a better experience; they buy them because of PRICE.

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The competition for Chromebooks isn’t Windows PCs, it’s tablets

A story made the rounds a few days ago about Microsoft battling Chromebooks with two cheap Windows PCs. It’s good that Microsoft is taking Chromebooks seriously. It should. It’s a device people with low computing needs might deem good enough. It’s a capable device for mail, web browsing and light office work; and for most people, that’s all they ever need. All for $200 to $350.

But you know what else is excellent for low computing needs? Tablets, which have already been eating into the PC market for years for precisely that reason. If Chromebooks didn’t exist today, I suspect more tablets would have been sold in its place instead of Ultrabooks.

The only thing Chromebooks share with laptops is a keyboard. When your grandparents’ old creaky laptop dies, will you buy them a $200 Chromebook or a $24 keyboard to pair with the $500 iPad they already know how to use?

Apple’s best in 25 years is supposed to be 2014 – we’ll be watching

A few days ago at the Code Conference, Apple’s Internet Software and Services chief Eddy Cue proclaimed that “Later this year, we’ve got the best product pipeline that I’ve seen in my 25 years at Apple.”  And he said it without hyperbole.

What a bold statement.  Those 25 years would include industry-shifting products like the iPod, iPhone, iPad and MacBook Air.

There’s two ways to interpret that statement.  The first is that Eddy was being literal — they are going to release better but really just incremental updates to existing products.  Technically, the newest versions could be the best products Apple has ever made.

But we’re all thinking the second — that there will be at least one new industry-shifting product announced by the end of this year.

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