Apple 's Market Share is the Wrong Metric! (1 Viewer)

[Lee Scoggins]

I have been following the Tiger launch closely and I believe there is a fundamental flaw in much of the reporting - I'll explain. Many of the Tiger reviews are very, very positive particularly Walt Mossberg's but other reporters are saying things, based on no real insight or data to speak of, like Apple's market share will hardly improve.

Rather than argue about guesses where Apple's market share will be next year, I think these folks are lazy thinkers and Apple's relative small market share (3.6% last quarter) is a crutch for them to lean on.

Here's why PC market share is a bad metric for thinking about Apple:

1. If Apple just doubles it market share, revenues will double. That's still a home run for Apple even if the resulting market share remains 7% or less.

2. When did volume = quality? Exhibit 1 = Microsoft. Case closed.

3. Isn't it more popular to have "mindshare" of younger, future customers? Here Apple's iPod and iTunes seems to be really a more relative indicator. If Apple takes care of these people certainly a Mac will be on their list of next cool toys to have...

4. We live in a world of convergence, what about share within the entire music-movie-photo-data-work sphere? Does anyone you know get excited about editing photos on their Windows PC like we do in iPhoto or Photoshop? The better metric would give credit to which company is easier to create on, which is more creative, and which offers the more robust media software.

5. Maybe we don't want share...PC market share is largely driven by corporate use. Yes, I think Apple has a real shot at getting more business customers, but do we want Apple to go from 3.6% to 36% share? Think of the hit we as consumers would take in terms of customer service, increased spyware, etc. Bottom line: Sometimes quality thrives in niches!

6. On a related note, if I buy a computer do I care who else has it beyond software availability? Maybe, but I really care about how fast is it? how easy to use is it? how reliable is it? how good am I treated after the sale? Every reliability survey I have seen gives Apple high marks and brand awareness for innovation and the like has Apple at or near the top.

Anyway, these are some thoughts on the subject....do you agree with me? Why? Why not?

 

[Chris Bardon]

That's an interesting way to look at things, and I certainly agree that if apple increased its market suare by a couple of percent, it would certainly be a success. The fact of the matter is though that overall market share does matter, since it's more likely that market share will dictate software availability. I think it also puts things into perspective for the inordinate amount of press that apple seems to get.

As for points 3 and 4 though, I really don't see apple capturing the younger consumers with the mac-if anything the only mac users I know are older people who don't think that they can learn to use a windows machine. I don't know that anyone gets any more or less excited about photo and video on a PC as opposed to a mac-I do both on my PC. Perhaps mac users are just more easily excitable?

And as a semi-on-topic rant, the whole "reliability" thing really bothers me. Windows XP is both stable and reliable, and my home machine is typically up for months at a time without a reboot. A little vigilance with respect to spyware and viruses is required of course, but this is really a pretty minimal effort. There are also a lot of problems with some of the pre-loaded packages that ship with many PCs. I can't remember the number of computers that I've "fixed" for people by just cleaning out the crap that whoever sold them their machine added to Windows to make it "better".

 

[Thomas Newton]

People have been predicting Apple's demise forever. Yet they're still around, they still take in more revenue than all but a few PC clone makers, and they turn a profit at the business.

Didn't IBM sell off their PC business to a Chinese outfit a little while back, because there wasn't good money to be made (by IBM's standards) in that business?

 

[Seth--L]

I thought most of their profit, though, came from the iPod.

 

[Thomas Newton]

The iPod's been making them a lot of money, but I believe they were profitable with just Macintoshes, at a time when a lot of PC vendors were having trouble making money.

 

[Ken Chan]

Are you applying the latest security patches? Those come fairly often, and usually require a reboot

 

[Lee Scoggins]

I read that the highly regarded ThinkPad was profitable but desktops were not. Lenovo is a very successful company with dominant market share in China. It will be interesting to see what happens but I expect ThinkPads will remain superb for a while much of the key IBM leadership moved over to Lenovo. As long as they are designed well in US and made in China you will probably see a good product.

 

[Lee Scoggins]

This is an excellent point Chris...my friend Karl is a top Java programmer who routinely reformats his hard drive on new computers and does a fresh install of XP. He even does this after every 12 months to clean out the junk that XP builds up. I think if Microsoft could make a utility that does that automatically then things would be much better. Apple is very good about putting only Mac software from the factory on the machine - none of this 30 trial period AOL and trial antivirus garbage.

 

[Pamela]

That's a seriously distorted view of Apple's demographics.

 

[Joseph S]

Yeah, there are people of all age groups that don't want to learn Windows. There are also people that know Windows too well and want to stay the hell away from it whenever they can.

XP and 2K are more reliable than the prior releases, but they're not as stable in general and require far more maintenance work than any end user should have to do. You've got Antispyware app 1, Antispyware app 2 because the first one isn't perfect, Antispyware app 3 to deal with Java issues and what the others don't catch, Anti Virus app, Registry backups, Registry cleanups, Drive imaging on a far too regular basis, application installers gallore, trying to figure out why device mangager is inept...

 

[Lew Crippen]

Adding to what Pamela wrote, I fall in the older Mac user demographic.

But as a computer guy since long before PCs existed, I can say that I'm using a Mac (since I left the business world) because its fun, not because I can't figure out the complex Windows OS.

 

[Lee Scoggins]

Same here. I have been working on Microsoft OS since the DOS days and I use Mac because I like the performance and features better. I run XP Pro just fine on my other machines but I like Mac since I don't spend 3 hours every week on spyware and utility programs.

As for demographics there is no doubt that the younger buyer of iPods will eventually be the PowerMac/iMac user of the future so I feel that Apple getting a nice group of these younger people will be important. There are always teenagers in number at every Apple store I have been to.

 

[Mike Wilk]

Something else is wrong if you have to devote that much time to maintenance.

YMMV

 

[Lee Scoggins]

No Mike they are clean machines. It's just to get the weekly updates for Norton ISS, Spybot, Adaware, and clean caches and defrag the hard drive it can easily take 3 hours. Plus there is the inevitable MS update as well and driver updates from IBM...

 

[Mike Wilk]

I have 2 desktops and a laptop running XP Pro and don't spend that much time doing maintenance. My machines are clean as well. I no longer use Norton Systemsuite on the old desktop and went to AVG and ZA on it. My sub to NAV runs out on the lappie in August. I went NOD32 on the new desktop and use Diskeeper with scheduled defrags after hours. My Adaware scans take about 20 minutes and find nothing. The burden for me is SPAM but Mailwasher takes care of what the ISP doesn't catch first.

YMMV

 

[Chris Bardon]

True, but can't 90% (or more) of that be automated? All of the NAV and XP updates are downloaded automatically, and it's not an issue to schedule a weekly virus scan and defrag.

 

[DaveF]

They've chased young mindshare for two decades through education markets, university sales and discounts, etc, and it hasn't seemed to have helped.

I think they need the "mindshare" of boring business people who buy large numbers of PCs for office memos, accounting tasks, email, and so on.

They could also use the mindshare of gamers, who spend lots of money chasing the hardware requirements of the latest games. These people also often advice friends and relatives on computer purchases.

 

[Craig S]

Well, Photoshop is available for Windows, so if editing photos excites you, you can do it equally as well on either platform.

I used to think Apple had a clear "better-than-Windows" photo organization tool in iPhoto, but then I downloaded the free Picasa from Google. Picasa is at least iPhoto's equal, and IMO, a little better.

Oh yeah, I have 2 XP machines & a Mac Mini. I use & like both OSs. I find that Mac enthusiasts, in their zeal for their preferred OS, tend to gloss over OX X's shortcomings, and REALLY overplay Windows' weaknesses. It's an operating system, not a religion!! (not aimed at anyone in this thread)

I put Tiger on my Mini Friday. Nice little upgrade, albeit overpriced at $129 IMO (or even the $99 I paid at Fry's). $49-$69 seems like it would have been more reasonable for what is really a point upgrade.

 

[Lee Scoggins]

I only became a Mac enthusiast after spending 20 years on Microsoft software and building 2 software companies with it. OS X has shortcomings but they are very minor compared to XP in my opinion and I'm a power user on XP Pro.

To call Tiger a minor upgrade is ridiculous...do you understand how much they changed the core image software and the core requirements to get Spotlight alone?

Think of all the time Microsoft has spent on a file system like Spotlight offers yet is still a year and a half away....Apple's cycle is to offer a major upgrade every few years - Jaguar then Panther then Tiger. The point upgrades come in between. Tiger's a whole new ball of wax. Going from 10.2 to 10.3 to 10.4 in OSX is roughly the equivalent of going from 95 to 98 to XP.

 

[Lee Scoggins]

Here's Merrill Lynch's latest comments on Apple:

While Apple's previous Mac OS X releases did not boost its share of the personal PC market, Tiger's 200 new features coupled with the ongoing iPod halo effect should pave the way to rosier results this time, says Merrill Lynch.

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The research and investment firm believes Tiger sales could top $100 million in its first quarter of release, consistent with an earlier analyst report that suggested first quarter Tiger sales could possibly double that of Panther, which grossed approximately $60 during its first quarter on the market in 2003.

"The Mac installed based in 2003 was approximately 10 million systems compared to 14 million units today. During the first quarter of its release, 4.7% of Mac users upgraded to Panther," said analyst Steve Milunovich. "If we assume the same conversion rate and an installed base that is 40% larger, Tiger could pull in about $84 million during its first quarter of release." If this conversion rate increases by 9 basis points, Tiger could pull in about $100 million during its first quarter, he added.

According to research by the Gartner Group, Mac OS X will run on 2.4% of the worldwide PC installed base in 2005. But Merrill Lynch expects Apple's OS to run over ten million computers in the U.S. during the same time period, grabbing over 4% market share.

In a research note released to clients today, the firm noted that Apple's PC unit share declined on average by 3 basis points one quarter after the release of its last three Mac OS updates (Puma, Jaguar, and Panther). "We believe the halo effect from the iPod craze will reverse this negative trend," Milunovich wrote in the note. He expects Apple to have about 2.5% of the worldwide market by the end of 2005, up from 2.1% in first calendar quarter of the year.

Merrill Lynch also reiterated expectations of imminent updates to Apple's iMac and eMac product lines. Meanwhile, the firm said the Mac mini could allow Apple’s desktop share to catch up to its notebook share. Currently Apple has 3.4% of the notebook market but just 1.7% of desktops.

Merrill Lynch reiterated a "Buy" rating on Apple with a price objective of $51 per share.