Apple may not quite be recession-proof, but it’s darn close.

Reporting earnings for the March quarter yesterday, Apple exceeded Wall Street expectations by a resounding 24 cents per share. Its profit of $1.21 billion translated to $1.33 per share, well above the $1.09 predicted.

To put this achievement in perspective, consider that Apple’s total profit was 26 cents per share as recently as the September quarter of 2004. In its fiscal 2003 Apple’s entire annual profit was just 19 cents per share.

So once again Apple made the gloomy prognosticators look foolish. (Even I admit I had my doubts.)

Overall Apple had its best non-holiday quarter ever, said Chief Financial Officer Peter Oppenheimer, with revenue increasing 9 percent year over year and profits increasing more than 15 percent.

Though Mac sales declined 3 percent from 2.29 million units in last year’s March quarter to 2.22 million, the iPhone picked up the slack and then some.

Unit sales of the iPhone rocketed 123 percent resulting in a 302 percent revenue increase year over year. The iPhone contributed $1.52 billion to Apple’s revenue total for the quarter, compared to $378 million last year.

Of course, the comparison isn’t exactly fair. The iPhone now is sold in 81 countries; in the early part of last year it was available in just four, including the United States.

Meanwhile, iPod unit sales grew 3 percent to 11 million, though revenue declined 16 percent from $1.818 billion to $1.665 billion.

I found this odd since Apple Chief Operating Officer Tim Cook said iPod Touch sales had more than doubled year over year. I’d have thought the Touch’s higher margins would have helped prop up overall iPod revenue.

But the iTunes Store segment (which includes “iPod services and Apple-branded and third-party iPod accessories) had a nice 18 percent bump in revenue from $881 million to $1.049 billion.

The amazing success of the App Store – which is on the verge of selling its 1 billionth app -- apparently gave the iTunes Store an extra boost this quarter.

A less likely contributor to Apple’s successful quarter was the Software, Service and Other sales category, which also saw revenue increase 18 percent to a tidy $625 million. Oppenheimer said that sales of the iLife ’09 and iWork ’09 suites, introduced in January, were better than anticipated.
A few more nuggets from the conference call:

Mac holds its own: For the past three months, numerous analysts and pundits have berated Apple for refusing to lower prices or introduce a low-cost laptop to compete with cheap netbook PCs. Apple has stubbornly held its ground, but was not punished as harshly as some predicted.

In fact, given the “challenging economic environment, Oppenheimer said the company was “very positive about our Mac performance.” He noted that IDC data showed the larger PC market contracting by 7 percent in the quarter, making the 3 percent decline in Mac sales look better by comparison.

No wonder Oppenheimer prefers IDC’s data; its report last week showed Apple’s market share increasing from 7.2 percent to 7.6 percent. Gartner’s report showed Apple’s market share falling from 8 percent to 7.4 percent.

The 2Q results could have been much worse. Cook said the refresh of the entire Mac desktop line March 3 gave sales a big boost at the end of the quarter. He said Mac sales in the U.S. suffered because both creative professionals and education customers were putting off buying due to the poor economy.

Unit sales of laptop Macs dove 22 percent, and many of those who did buy went for the previous-generation model $999 MacBook. Cook called that a “good thing,” seeing it as strength among the consumer market.

The dreaded netbook question: Asked about the diminutive PCs, Cook blasted the category as he has before, criticizing the “cramped keyboards, terrible software, junky hardware, [and] very small screens.”

Cook said Apple had no interest in creating such a product, then deftly pointed out that the iPhone and iPod Touch can perform many of the tasks for which people buy netbooks, such as e-mail and light Web browsing.

And then he hinted once again that Apple might be developing some sort of innovative product in the genre, offering teasers such as “the product pipeline is fantastic for the Mac.”

Retail Stores: The stores made a bit less money, but Apple is selling its wares – particularly the iPhone – in more places these days. Still, Oppenheimer said “about half” of all Mac sales in the stores were to customers who had never previously owned a Mac, same as he always does. So apparently people haven’t stopped switching from Windows to the Mac, no matter what Lauren says.

The money’s in the mattress: Apple’s cash position grew by $841 million, bringing its war chest to $28.9 billion. And no plans to spend it. “Our investment priority for the cash continues to be preservation of capital,” Oppenheimer said. So there.

Steve Jobs: When asked for an update on the recuperating CEO, Oppenheimer reiterated the company line: “We all look forward to Steve returning to Apple at the end of June.”

The iPhone platform: The combined sales of the iPhone and iPod Touch have reached 37 million units, with about 21 million iPhones and 16 million Touches. Both Cook and Oppenheimer spoke often of the new platform’s potential, particularly with the iPhone OS 3.0 coming this summer. “I think it unleashes a whole new level of innovation that keeps Apple years ahead of everyone else,” Cook said.

Feeling the love for AT&T: Piper Jaffray’s Gene Munster, citing survey data showing that some people don’t buy an iPhone just to avoid AT&T, asked why Apple maintains the exclusive relationship in the U.S.

Cook replied that AT&T has “done a very good job with the iPhone.” He said Apple is happy with AT&T and has no plans to change the relationship. He also admitted that Apple’s choice of GSM technology – driven by the need to make the iPhone work with the most common networks globally -- precluded a relationship with Verizon, which uses CDMA.

Posted by David Zeiler at 7:13 AM | Permalink | Comments (1)
                       

A dramatic shift in the Mac to PC ratio at the University of Virginia over the past five years is nothing short of a Machead fantasy.

After languishing around the neighborhood of 4 percent for years, the Mac began a startling rise among first-year students at UVA, doubling to 8.26 percent in 2004. Large gains have followed every year since, with the number just passing 37 percent this past fall.

That, my friends, is a 925 percent increase, a once unthinkable turn of events.

If this is in any way representative of a general shift among young consumers toward Apple, the future of the Mac could be brighter than ever.

Although extremely well regarded (U.S. News and World Report ranked UVA second in its 2008 list of the best national public universities), the University of Virginia is in many ways a typical public university. It offers a broad range of studies and recent freshman classes have been increasingly diverse, both ethnically and economically.

And unlike some institutions, UVA doesn’t have an expressed preference for either Macs or Windows PCs. That freedom of choice makes it a viable test bed for computer preferences among university students.

UVA doesn’t offer any explanations for the shift to Macs; it simply complies the data every year and publishes it on the university Web site. However, based on other data collected by UVA in the same survey, the legendary “iPod halo effect” appears the most likely cause.

UVA has asked about MP3 players only since 2006, but that year 67 percent of the incoming students owned iPods, with only 10.27 percent owning another brand of music device. In 2007 that number rose to 75 percent; an additional 2 percent owned an iPhone.

In 2008 UVA lumped the iPhone and iPod Touch together. In the current freshman class, 18 percent owned a Touch or iPhone, with another 64 percent owning another type of iPod. Admitting the possibility that some students may have answered affirmatively to both, the two categories nevertheless add up to 82 percent.

I realize this is only data from one school, and that UVA’s student population probably can afford Macs more easily than the average U.S. college student.

Still, as recently as 2001 only 2.8 percent of UVA students arrived on campus with a Mac. Such an extraordinary turnaround in such a short period indicates Apple has had a profound influence on teen-age consumers (at least in the sample attending UVA).

What we have here is a piece of evidence, small though it may be, that Apple’s “Trojan Horse” strategy -- to win over customers first with the iPod, and more recently with the iPhone – continues to bear fruit.

And the orchard has only just begun to blossom.

Posted by David Zeiler at 3:33 PM in Mac market share | Permalink | Comments (4)
                       

Microsoft finally crossed the line.

It’s most recent TV ad, “Lauren,” showing a perky young woman shopping for a laptop with a 17-inch screen that costs under $1,000, mentions the Mac by name.

One of the generally principals of advertising is to avoid mentioning a competitor by name. This is especially true for market leaders, and in the computer market Windows retains an overwhelming 90 percent share.

<br/><a href="http://video.msn.com/video.aspx?vid=0bb6a07c-c829-4562-8375-49e6693810c7" target="_new" title="Laptop Hunters $1000 - Lauren Gets an HP Pavilion">Video: Laptop Hunters $1000 - Lauren Gets an HP Pavilion</a>

That Microsoft feels compelled to send Lauren into “The Mac Store” (as she misidentifies it) in an attempt to convince viewers that Macs cost too much for regular people, tells me the company can hear Apple’s footsteps.

Numerous Mac Web sites have deconstructed the ad over the past several days, noting among other things that the $699 Hewlett-Packard laptop Lauren obtains at a Best Buy is a lousy PC. Moreover, the ad ignores why increasing numbers of Windows users have switched away from cheap PCs to Macs, such as the iLife software suite, superior build quality and overall ease of use.

The “Lauren” ad is but the latest sign that Microsoft doesn’t like what it sees in the marketplace, despite having lost just a tiny amount of market share to the Mac.

Knocking Apple in a TV ad probably has as much to do with the other areas in which the two companies compete as it does with the computer market.

In the bigger picture -- one that includes music and smartphones -- Apple’s success clearly irks Microsoft. Combine that with the constant needling from Apple’s “I’m a Mac/I’m a PC” ads and one can imagine the gang in Redmond has been itching to punch back for quite some time.

Take the music arena. Although Microsoft’s Zune MP3 player feature for feature is competitive with the iPod, it has made almost no headway in gaining market share. That has to drive the folks in Redmond nuts.

However, Apple’s greatest threat to Microsoft lies in the smartphone market. When Apple announced the iPhone in January 2007, Microsoft CEO Steve Ballmer infamously dismissed the iPhone as too expensive.

“There's no chance that the iPhone is going to get any significant market share,” Ballmer said in an April 2007 USA Today interview. “No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get."

Let’s see how that turned out, shall we?

According to statistics for 2008 released by research firm Gartner March 11, the iPhone had 8.2 percent of the worldwide market, while Windows Mobile had 11.8 percent.

But the numbers specific to the fourth quarter show Microsoft gaining a little share but Apple closing the gap. Windows Mobile had a share of 12.4 percent, the iPhone 10.7 percent – a mere 1.7 percent difference.

Apart from stiff competition, the popularity of the iPhone presents another problem for Microsoft: like the iPod, it’s introducing Apple technology to millions of Windows users. Among the factors in the rise in the Mac’s market share has been the iPod “halo effect.”

Hey, if I ran Microsoft, I’d be worried, too.

Expect Redmond’s public assault on Apple not only to continue, but to get nastier. Microsoft doesn’t need to dominate music or phones (as much as it would love to), but the near-monopoly it has with Windows on PCs remains one of its primary profit centers (Office being the other.)

Mac sales may have slowed for now, but when the economy improves its increases in market share will resume. The Mac experience is about much more than "the logo," as Ballmer derisively put it last week.

A resumption of the Mac's growth is what Microsoft fears. So it’s exploiting the bad economy with an ad like “Lauren” to depict Macs as an impractical choice.

It might even be marginally effective in the short term, but what’s the strategy when the economy perks up?

Any thoughts, Mr. Ballmer?

Posted by David Zeiler at 4:12 AM in Mac market share, Taunting Microsoft | Permalink | Comments (21)
                       

After months of gains, usage of Mac OS X on the Web as measured by Net Applications dropped slightly in February. And while nearly two-thirds of “mobile browsing” was done from an iPhone, that dominance may not last.

I’ll get to the Mac OS X data in a moment, but first let’s look at the mobile browsing data, a metric Net Applications had not broken out separately until this month. Not surprisingly, the iPhone dominates with a 66.44 percent share.

Although Net Applications describes its data as “market share,” a more accurate description would be “user share,” as in the percentage of people on the Web using a particular operating system or Web browser. Its statistics derive from data the company gathers in the course of its business -- measuring Web traffic for its clients.

It’s good to be king, but a little digging indicates the iPhone already may have peaked.

Although Net Applications does not yet have a market share trend screen for its mobile browsing data, I nevertheless found mobile numbers for January (but nothing any earlier).

In January, the iPhone had a 69.54 percent share of mobile Web browsing, so it’s actually down 3.1 percent in February. And each of Apple’s rivals is up from January except one – Windows Mobile, which lost 0.69 percent.

While the iPhone’s superior browsing experience has made it the device of choice for mobile users who want to access the Internet, the competition has noticed. Suddenly every smartphone maker has a touchscreen phone model.

Of course, Apple is expected to introduce a new iPhone model in May or June, which could put it another step ahead of rival devices. But as the other guys figure out how to make browsing easier on their phones, the iPhone’s dominance in this arena slowly will erode.

Nothing to panic about, mind you – but I think some of the excitement this week over this number has been misplaced.

Eventually Apple’s Web share number will fall closer in line with its smartphone unit share number – a number that according to the Tomi Ahonen Almanac 2009 was about 13 percent in 2008.

I’m not so sure about the Mac OS X numbers.

For the past couple of months I’ve been calculating the Mac OS X number by adding up the numbers of all the Apple devices represented: Macs, iPhones, and iPod Touches.

By that measure, the percentage of people using any version of Mac OS X to access the Web fell from 10.52 percent in January to 10.2 percent in February. That’s still a smidgen ahead of December’s total of 10.15 percent.

The February drop in traffic coming from Mac OS X devices could mean something, but not necessarily. Month to month changes in net Applications numbers are not always meaningful.

For example, the last significant decline in the Mac OS X number was July of last year, when it lost 0.18 percent. It took until September to bounce back, when it hit 8.23 percent. Trends over time matter more than the occasional hiccup.

Or perhaps Net Applications’ assertion in January that people spent more time on the Internet with new Apple gear they had received as gifts over the holidays had some truth to it. The novelty of the new devices may have lingered into January but faded by February.

More likely it’s the rising popularity of netbooks, none of which run OS X (well, except for a few owners have hacked), that have blunted the Mac’s growth on the Web.

One of the primary purposes of a netbook, after all, is to serve as a more easily carried PC for accessing the Internet on the go.

If the netbook phenomenon indeed has stalled Mac growth on the Web – and in overall sales, for that matter -- it gives more ammunition to those pleading with Apple to build a Mac netbook.

I expect to see some sort of netbook response from Apple before the end of 2009 -- probably not a Mac, but a brilliantly conceived portable computing device that will set the netbook market on its collective head.

Posted by David Zeiler at 5:09 AM in Mac market share | Permalink | Comments (7)
                       

Mac sales fell in the past 90 days but could improve slightly going forward, the results of a recent ChangeWave Research survey suggest. Meanwhile, the survey shows Apple retaining its large lead among the top PC manufacturers in customer satisfaction.

Conducted Feb. 2-9 (sample size: 3,115), the survey focused on consumer PC purchasing. The Rockville, Md.-based ChangeWave conducts frequent surveys from among the 20,000 members of its “ChangeWave Alliance,” a self-selected group of mostly U.S.-based business professionals and early adopter consumers.

For the past year or so, the ChangeWave surveys have had almost unequivocally good news for Apple, but the February data shows the crumbling economy having a negative impact on the Mac.

The worst data regards sales over the previous 90 days. Of those who bought a PC, only 15 percent bought a Mac desktop and 20 percent a Mac laptop -- both 2 percent declines from January’s survey.

The picture darkens further if you look back to November’s corresponding data, when 26 percent of PC buyers chose a Mac laptop and 21 percent a Mac desktop.

Meanwhile, Hewlett-Packard’s numbers rose significantly from January – its laptops up 4 percent and its desktops up 5 percent. The numbers for most other PC makers stayed about the same from January. But almost every PC maker’s numbers were up from the November survey – a bad omen for Apple, the only manufacturer with consecutive declines.

And the ChangeWave news comes on the heels of a report by research firm NPD that Mac unit sales through U.S. retail outlets fell 6 percent in the month of January. Measured by dollar value, Mac sales dropped a scary 11 percent.

According to the NPD data, overall PC unit sales through U.S. retailers rose 13 percent, although revenue fell 3.2 percent.

So while Apple may be struggling right now, it isn’t faring that much worse than its PC counterparts.

However, if ChangeWave’s forward-looking data proves prescient, Apple might see a slight improvement in the months ahead, at least relative to other PC makers. Of the respondents who plan to buy a computer in the next 90 days, 30 percent said they’d get a Mac laptop (up 3 percent from January) and 26 percent a Mac desktop (down 2 percent).

Since Apple sells more laptops than desktops, the higher laptop number could prove a bright spot. The lack of fresh iMac models is the most likely reason for Apple’s lagging desktop numbers; conversely, it makes sense consumers would continue to desire the relatively new (October) unibody MacBooks.

Some pundits think Apple should offer a Mac netbook, citing the growing popularity of the less expensive, less powerful machines. In fact, the ChangeWave survey found that of those planning to buy a PC, 18 percent said they’d get a netbook -- up 4 percent from January.

The trouble with netbooks, of course, is thin margins, long the bane of low-end PC makers. You won’t see Apple enter this space until it has something it can sell for a decent profit. Although, as even ChangeWave points out, “some Apple users consider the iPhone to be a form of netbook.”

The one clear positive for Apple in the ChangeWave survey is in the customer satisfaction category. Of those who had bought a Mac in the past 90 days 81 percent said they were “very satisfied.” ASUS came in second with 67 percent; Dell and HP trailed with 55 percent and 52 percent respectively.

The results for this question change very little from survey to survey; Apple always hovers around the 80 percent mark with most of its rivals bunched in the 50-60 percent range.

Customer satisfaction is a persistent Apple strength that will helps maintain its loyal customer base through the challenging months ahead.

And clearly, times are getting tougher. ChangeWave’s data on the overall PC market shows future demand at the “lowest level ever recorded” in its surveys. Only 10 percent of the respondents (6 percent laptops, 4 percent desktops) plan to buy a PC in the next 90 days.

To put that in context, the combined number in November was 14 percent, typical for most of 2008. Going back to November 2007, the combined number was 19 percent (11 percent laptops, 8 percent desktops).

What should Apple do to juice Mac sales during the downturn?

Given the company’s strong cash position and solid products, Apple can just sweat it out. No radical action is required.

Slashing prices or offering bottom-of-the-barrel Macs at giveaway prices would be a losing strategy over the long term. Apple does not need to soil its brand by joining its PC brethren in a race to see who can sell the most cheap junk.

Instead, Apple can afford to stay the course and wait out the bad times until its loyal customers can afford to buy again.

Posted by David Zeiler at 7:48 AM in Mac market share | Permalink | Comments (7)
                       

Mac OS X-based devices enjoyed yet another increase in Net Application’s January report on Internet usage, with the combination of Macs (9.93 percent) iPhones (0.48 percent) and iPod Touches (0.11 percent) reaching a combined high of 10.52 percent.

The new data contradict an explanation Net Applications gave last month that Mac OS X’s December gains were a holiday anomaly -– people supposedly were home playing with their Apple gear instead of goofing off at work on the Web with their Windows PCs.

Net Applications monthly statistics, which it publishes on its Web site, derive from data the company gathers in the course of its business -- measuring Web traffic for its clients. It’s not a scientific process, but the sample is huge – 160 million Web site visits – so the data is useful in detecting trends.

Although Net Applications describes its data as “market share,” a more accurate description would be “user share,” as in the percentage of people on the Web using a particular operating system or Web browser.

While many observers on the Web today noted the Mac has nearly reached 10 percent share, last month the total share of OS X -- with the help of the iPhone and iPod Touch – had already exceeded 10 percent (10.15 percent).

January’s data shows Team OS X with a 0.37 percent increase. The Mac contributed most of the gain with .30 percent, but both the iPhone (+0.04) and the iPod Touch (+0.03) showed significant growth.

In fact, the rate of growth for the two Apple Mobile devices far outstrips the Mac’s modest 3.11 percent increase. The iPhone tripled the Mac’s growth rate with 9.09 percent; while the iPod Touch had a remarkable 37.5 percent increase.

By growing so dramatically Apple’s mobile platform lengthened its lead over the competition, most of which stood still compared with December. Windows CE remained stuck at 0.05 percent; Symbian at 0.04 percent; and Hiptop at 0.03 percent. Android debuted in the stats at 0.03 percent, while the BlackBerry vanished from the list altogether.

Some pundits, such as Joe Wilcox, seem perplexed at the iPhone’s steady growth in the Net Applications data. Writes Wilcox:

What about BlackBerry OS, Symbian or Windows Mobile? Nokia shipped more than 110 million cell phones in the third quarter, according to Gartner (fourth-quarter numbers aren't publicly available yet). Symbian OS smartphone shipments were nearly four times iPhone OS (18.2 million versus 4.7 million, respectively). What, there are no Nokia smartphone users accessing the Web? Point: Data isn't complete.

No, it’s so, Joe. Other smartphones may outnumber the iPhone, but those folks wanted a device more for e-mail and other business tasks. People who buy an iPhone choose it because it’s better at things like Web browsing. It does make sense.

Another example is games. According to a ComScore report released the other day, iPhone owners are 8.5 times more likely to download game apps than owners of other smartphones.

In Net Applications’ browser data, Apple’s Safari browser cracked 8 percent share for the first time, hitting 8.29 percent. Internet Explorer fell again to a new low of 67.55 percent, losing share to Safari, Firefox (21.53 percent) and Google’s new Chrome browser (1.12 percent).

Posted by David Zeiler at 3:58 PM in Mac market share | Permalink | Comments (2)
                       

AdMob, a company that supplies online Web ads, released metric data on Thursday showing an enormous spike in traffic coming from users of the iPod Touch on Christmas and in the days afterward.

Meanwhile, iPhone users continue to comprise an ever-larger number of people using mobile devices to access the Web.

Apple must have sold mountains of iPod Touches. From Thanksgiving on, the three models of the Touch periodically were out of stock at Amazon and other retailers, and a number of anecdotal reports in December pointed toward strong sales.

If Apple is in a bragging mood at its January 21 earnings conference call, it might break out the iPod Touch’s quarterly sales numbers (it usually doesn’t). In any case, one can find plenty of powerful evidence for the Touch’s success in the metric data supplied by companies like AdMob.

Ad requests from the iPod Touch increased from 86 million in November to 292 million in December, AdMob reported. Worldwide Touch traffic was 2.4 times higher in the week after Christmas than it was the week before.

But things look even sweeter for Apple when you look at the data for the iPod Touch and iPhone together. With the Touch’s surprising performance and the iPhone’s share growing at the expense of nearly all other Web-enabled mobile phones, Apple appears to have a good chance of fulfilling its goal of creating a dominant new mobile computing platform.

In the data that ranks the top handsets by the number of worldwide ad requests, the iPhone holds the No. 1 spot with 10.8 percent. That’s more than double the No. 2 device – astonishingly, the iPod Touch -- with 4.7 percent.

Motorola’s RAZR V3 followed with 3.4 percent; the Nokia N70, with 2.7 percent, was No. 4. The highest BlackBerry on the list, the 8800, was seventh with 1.5 percent.

Of course, Apple benefits in this category by having just one model of iPhone rather than the dozens of models sold by the competition, although the fact the Touch beat them all as well weakens that excuse.

Nevertheless, even in the data that lists the worldwide leaders by manufacturer, Apple’s 15.5 percent is second only to Nokia’s 29 percent. BlackBerry maker Research in Motion came in seventh with 3.5 percent.

And get this: of the 10 manufacturers, only Apple posted a gain in share (plus 7.6 percent) from the previous month. Every other manufacturer lost share except HTC, which was flat at 1.8 percent.

AdMob’s U.S. specific data tilts even more favorably toward Apple. In the handset data, the iPhone-iPod Touch team again take the top two spots with 16.2 percent and 7.1 percent.

Apple leads all manufacturers in the U.S. market with its 23.3 percent share, followed by Motorola with 21.6 percent. RIM is fifth with 6.4 percent.

And again, only Apple gained share from the previous month, picking up 11.1 percent. RIM lost 1.1 percent and Motorola 3.5 percent.

AdMob also breaks the data down by operating system, though in this category it leaves out the iPod Touch because it isn’t a phone.

Symbian leads in worldwide OS share with 41 percent, but the iPhone’s Mac OS nets 32 percent even without the Touch’s help. RIM takes third with 10 percent, just edging Windows Mobile’s 9 percent.

That Apple’s devices show rapidly growing share among mobile devices on the Web tells us that people who want such capabilities – and there are more of them every day – are choosing Apple products.

So far Apple seems to be a step ahead of the competition, with the wild success of the App Store giving it a major advantage over all rivals (for the present, anyway).

The coming year will tell if Apple’s platform can hold off those rivals, primarily RIM’s BlackBerry Storm and Google’s Android operating system. Both have or plan to have app stores of their own.

And just this week, Palm reawakened from the dead with its just-announced Pre touchscreen phone, which has received very favorable early reviews.

What the competition can’t duplicate is the iPod Touch, a means to gain Web share from customers who don’t want a smart phone’s expensive monthly contract. The 8 GB iPod Touch gives customers a Web-capable mobile device for as little as $229.

Posted by David Zeiler at 7:21 PM | Permalink | Comments (7)
                       

One out of ten people browsing the Web in December were using a version of Mac OS X, according to the monthly statistics from Web services company Net Applications.

Users of Mac OS X on Intel (7.19) and PowerPC (2.44) Macs combined for 9.63 percent; iPhone users added 0.44 percent and iPod Touch users another 0.08 percent.

The total of 10.15 percent marks the highest share of users ever for Mac OS X in the Net Applications stats.

A point of clarification: although Net Applications describes its data as “market share,” a more accurate description would be “user share,” as in the percentage of people on the Web using a particular operating system or Web browser.

The free monthly statistics derive from data the company gathers in the course of its business -- measuring Web traffic for its clients. It’s not a scientific process, but the sample is huge – 160 million Web site visits – so the data is useful in detecting trends.

Back in June I noted the Mac’s share had more than doubled from 4.26 percent in June 2006 to 7.83 percent in May 2008. With share now over 10 percent, the upward trend for Mac OS X appears to be accelerating.

A disclaimer on the Net Applications site warns “the December holiday season strongly favored residential over business usage. This in turn increases the relative usage share of Mac, Firefox, Safari and other products that have relatively high residential usage,” but the trend line for OS X had virtually the same trajectory in November (see chart).

The numbers jibe with market share reports on sales from such firms as IDC and Gartner, both of which reported Apple’s U.S. market share in the third quarter of 2008 at about 9.5 percent.

And while most of the gains in the Net Applications stats have come from people using Apple’s computers, one can’t dismiss the iPhone. In fact, one could argue the iPhone’s rise to 0.44 percent is more impressive than the Mac’s gains. We’re talking about a phone, after all.

Compare the iPhone’s number against other smartphone operating systems: Windows CE managed only 0.05 percent and the mighty BlackBerry a tiny 0.01 percent. The iPod Touch – not even a smart phone itself -- had more than both combined.

In the battle for dominance among mobile devices on the Web, Apple has the clear early lead.

Meanwhile, Microsoft’s Windows has continued its slow erosion in share, having slipped below 90 percent (hitting 89.62) for the first time in the November survey. The December stats put Windows share at 88.68 percent, nearly a full percentage point drop in one month.

Windows accounted for 95.25 percent of Web users in the June 2006 survey, so we’re looking at a loss of 6.57 percent compared to Mac OS X’s gain of 5.89 percent over the same period.

Of greater concern to Microsoft might be the relatively small adoption rate of Windows Vista. More than 65 percent of Windows users are still on XP, with only 21.12 percent on Vista. The next version of Windows, Windows 7, is expected in early 2010, so many users may bypass Vista altogether.

And if Microsoft chief Steve Ballmer wants yet something else to stew over, he can check the browser usage numbers. Internet Explorer, which had 84.11 percent share in June 2006, now has only 68.15 percent, a nearly 16 point fall; IE lost 1.62 percent just from November.

Safari has taken some share, having risen from 3.19 percent in June 2006 to 7.93 percent in December 2008, but Firefox has emerged as a significant threat. As of December Firefox has a share of 21.34 percent, nearly twice the 10.77 percent it had in June 2006.

Methinks the era of Microsoft hegemony is crumbling fast.

Posted by David Zeiler at 8:44 PM | Permalink | Comments (0)
                       

Despite greatly scaled back consumer spending this holiday season, Apple should fare better than most other companies, including most of its competitors.

A recent set of surveys conducted by Rockville, Md.-based ChangeWave Research on planned consumer purchases over the next 90 days hints that Apple’s primary products, particularly its Macs, will remain popular.

One would expect the opposite. Because Apple’s products have a better-quality, higher price reputation, you’d think consumers would be looking for cheaper alternatives this year. But as usual, Apple defies conventional wisdom.

Though ChangeWave’s predictive numbers usually overstate Apple’s actual numbers as reported by the company, I’ve found they reflect general trends pretty well. The research firm conducts frequent surveys from among the 20,000 members of its “ChangeWave Alliance,” a self-selected group of business professionals and early adopter consumers.

ChangeWave’s consumer PC purchasing survey (conducted Oct. 23- Nov.3 among 3,699 respondents) indicates that while Apple may sell fewer Macs than it would like, its share of the overall PC market pie should continue to grow -- even if only a bit.

The number of people planning to buy a PC this holiday season fell about 25 percent from the November 2007 survey, from 11 percent to 8 percent, among those looking to buy a laptop and from 8 percent to 6 percent among desktop-buyers.

According to the survey, Apple can expect 27 percent of the desktop buyers and 33 percent of the laptop buyers to choose a Mac. The desktop number is down two points, but the laptop number – which account for nearly two-thirds of all Mac sales – is up four points from a year ago.

The lack of a recent refresh in the Mac desktop line probably reduced enthusiasm for new iMacs, but Apple should cash in on the recently unveiled aluminum unibody MacBooks.

ChangeWave asked specifically about the new MacBooks; 7 percent of the respondents said they’d be very or somewhat likely to buy one. And 6 percent said they’d be very or somewhat likely to buy one of the previous-model, reduced-in-price MacBooks – proving the wisdom of Apple keeping it in the lineup.

More good news for Apple surfaces in ChangeWave’s question asking likely PC buyers which operating system they’d want preinstalled, and I’m not talking about the 29 percent that would like Mac OS X Leopard.

A shocking 48 percent of the respondents said they’d prefer a version of eight-year-old Windows XP to Vista, which only 33 percent chose. The numbers for Vista actually dropped from last year, when Vista edged Windows XP 42 percent to 40 percent.

Apparently the continuous pounding Vista has endured in the tech media as well as from Apple’s “Get a Mac” TV ads has become burned into consumers’ minds. Vista’s now-unsalvageable reputation will continue to motivate PC buyers to consider a Mac at least through 2009. The exact time frame depends on when Microsoft gets Windows 7 out the door. By then Apple should have Mac OS X Snow Leopard ready.

ChangeWave also had positive news for the iPhone. In a survey of smartphone buyers, 41 percent said they’d get an iPhone, compared to 24 percent who said they planned on Research in Motion’s new BlackBerry Storm. T-Mobile’s G1, which sports Google’s long-anticipated Android operating system, scored only 4 percent.

Apple’s Retail Store failed to gain ground in a survey on consumer spending trends, but at least held its own. When asked where they planned to shop for home entertainment products, 9 percent mentioned the Apple Store, same as last year.

As rough as this shopping season will be for all merchants, Apple’s cachet should help it collect a big enough share of the few dollars spent to make a respectable quarter.

Posted by David Zeiler at 8:46 AM in Mac market share | Permalink | Comments (2)
                       

Apple’s success with consumers has begun to spill over into the enterprise market, with Mac adoption among enterprise customers increasing four-fold in less than two years.

Mac use in businesses rose from 1.1 percent in October 2006 to 4.5 percent in June of this year, according to a report by analyst Benjamin Gray of Forrester Research released Friday and made public by eWeek’s Joe Wilcox.

While 4.5 percent of the enterprise market may appear puny next to the nearly 95 percent held by Microsoft’s Windows, it is nevertheless startling that the Mac has made any headway at all in a market in which it had languished for years.

An array of stubborn perceptions made the Mac a pariah platform in the enterprise. Windows PCs were cheaper. IT departments didn’t want to support a second platform or deal with Mac-Windows network integration issues. Many disliked the Mac because only one vendor manufactured it, meaning no competitive bids and no replacement vendor if Apple went under.

Meanwhile, Apple rarely bothered to court the enterprise, preferring to emphasize its identity as a consumer technology company. Given Apple’s exploding growth in recent years, it’s hard to argue with the strategy.

Somewhere along the way the efforts to win over consumers, particularly its emphasis on ease of use, began to sway opinions in the enterprise.

“Apple’s singular focus on user experience has resulted in some success in the enterprise – without even trying to break into the market,” Grey wrote in his report.

The Forrester report also cites virtualization (the ability to run a different operating system in addition to the one native to the computer) as a reason businesses have taken more interest in the Mac, but today’s Macs go beyond virtualization.

Thanks to their Intel-made CPUs, current Macs can run Windows XP or Vista not only in a virtual environment, but also natively via Apple’s free Bootcamp utility. That versatility removes much of the risk IT heads associated with buying Macs.

Wilcox predicted the iPhone’s popularity would create a “halo effect” akin to that the iPod had in attracting more consumers to the Mac. Apple in fact has made a play for business customers with the iPhone by adding support for Microsoft Exchange, which most businesses use to run their e-mail.

Many executives once loyal to Research in Motion’s BlackBerry now own iPhones and have started pushing their IT people to support it in-house. Since the iPhone runs Mac OS X, support for Macs isn’t much of a leap.

Finally, Gray offers this reason for Mac growth among businesses: “Tech populism drives younger, more tech-savvy workers to buy whatever they need to work smarter, faster, and cheaper.”

Today’s students are tomorrow’s young workers, and ever-higher numbers of them are Apple customers. In a report released earlier this month research firm IDC said Apple had regained the lead in notebook sales from Dell with 36.5 percent of the market. Dell sunk to 27.1 percent.

“What we’ve seen over the past couple of years is a significant increase in the number of students who own an Apple laptop or Apple desktop or plan to buy one,” Eric Weil of Student Monitor, a research company focused on college students, told Investor’s Business Daily.

It all adds up to another perfect storm for Apple, and another reason why it could enjoy year-over year Mac sales growth of 30 to 40 percent for quite a few quarters to come.

Imagine what would happen if Apple actually put some effort into selling Macs to the enterprise. Yep.

Posted by David Zeiler at 8:35 AM in Mac market share | Permalink | Comments (3)
                       

After the botched MobileMe/iPhone 3G launch, as well as more recent problems users have reported with iPhone 3G reception, you’d assume customers would punish Apple.

Add to that an assortment of other issues over the past year or so, from the bricking of unlocked iPhones last fall to a plethora of Mac OS X Leopard bugs to last week’s iPhone “kill switch” dustup, and you have a lot of reasons consumers might want to avoid Apple products.

But whatever the disappointments, you won’t see it reflected in the company’s third quarter sales numbers.

Apple is expected to report another record quarter in September, according to a note to clients by Royal Bank of Canada analyst Mike Abramsky. AppleInsider reported this morning that Abramsky said Apple should see year-over year growth of 44 percent, with Mac sales topping 3 million for the first time.

That would beat the previous record – 2.496 million Macs sold, just set in the July quarter – by an amazing 20 percent. Abramsky also predicts iPhone 3G sales for the quarter to reach 5.1 million, which would nearly double the previous record for iPhone sales (2.315 million in the December 2007 quarter).

Earlier this week Apple made news by scoring 10 points higher than its closest competitor (Dell) on the University of Michigan’s American Customer Satisfaction Index. Apple received its highest score ever, 85 on the ASCI’s 100-point scale. Last year it scored a 79.

"Apple is not without its quality problems," ACSI project head Claes Fornell told Computerworld. "People know there have been some service and product quality problems, but Apple has an almost Teflon-like quality. Its problems don't really seem to matter to consumers."

The ASCI survey was taken before the MobileMe launch and recent iPhone 3G problems, but it seems someone is always complaining about an Apple product or service, if not taking them to court.

How can Apple commit so many wrongs and yet continue to enjoy record customer satisfaction numbers and booming sales growth?

Apple’s hold on customers can’t be completely explained by the “fanboy effect”; that is, people so devoted to the company they forgive it for any transgression. Apple has added many new customers in the past few years that do not fall into that category, from casual iPod owners to disgruntled PC users switching from Windows.

Such customers have bought Apple products with high expectations they would “just work.” I can’t imagine they’d tolerate consistently poor quality and bad service when those factors most likely drove them into the Apple camp.

Here’s what I think Apple’s “Teflon” is made of:

Cool factor: Apple’s marketing machine has successfully sold the idea of Apple as the coolest consumer technology company, a notion reinforced by its acclaimed product designs. People who buy Apple products feel that the company’s hip image will reflect on them. It doesn’t fix the problems, but it makes it harder to turn away from Apple.

Worse alternatives: Even if you have had a bad experience with Apple, many know first-hand that living with a Dell or Hewlett-Packard PC running Windows could be worse. Apple’s seamless control of the entire user experience has no substitute in the consumer technology world.

Apple trying harder: Though historically poor at fixing problems, Apple has gotten better recently. Not only did it work hard to address MobileMe’s problems, it just this week gave MobileMe account holders 60 more free days in addition to the 30 days it awarded a month ago. The company apologized. Customers will forgive a company that makes an effort to make things right.

Apple also has made an effort to get software fixes out to customers more rapidly, although it could do a better job of explaining to affected customers what the heck is going on (e.g., this week’s iPhone 3G reception fix).

Not as bad as it looks: Apple benefits from the media’s obsession with it when it rolls out new products – no tech company gets comparable attention – but that backfires when Apple has trouble. Many of Apple’s problems that draw extensive coverage would be largely ignored if they befell another company.

Squeaky wheels: With the exception of some large-scale blunders, like the MobileMe/iPhone 3G launch, most of Apple’s problems affect a relatively small number of customers, many of whom are very vocal. Most Apple customers have minor, easily rectified problems, and have no serious beef with the company.

For Apple to lose massive numbers of customers, it’s going to have to commit sins far worse than any it has thus far and be utterly non-repentant.

Posted by David Zeiler at 4:37 PM | Permalink | Comments (9)
                       

On multiple occasions during Apple’s earnings conference call yesterday, CFO Peter Oppenheimer cited a “future product transition” as one of the reasons the company expected somewhat lower gross margins for the September quarter.

That any Apple executive would hint at an imminent new product in a public forum is extraordinary. It means whatever is coming will make a big splash, though probably not of the magnitude of the iPhone.

But what is it? It’s likely that the mystery product or products – or as Oppenheimer put it, “state-of-the-art new products that our competitors just aren’t going to be able to match” – will involve a touch screen.

I believe it could be the long-rumored Mac tablet PC. In any case, Oppenheimer’s remarks about it affecting the September quarter tells us it will arrive soon. He also hinted at other products in the pipeline that might shave gross margins in 2009.

As for Apple’s earnings, they were routinely spectacular. Apple made a profit of $1.07 billion in the June quarter on revenue of $7.46 billion. The earnings per share of $1.19 beat Wall Street estimates by 11 cents.

Strong Mac sales led the way. Apple sold nearly 2.5 million Macs, its highest quarterly Mac total ever. According to Oppenheimer, the 41 percent year-over-year growth is three times the overall PC market growth rate.

That would seem to jibe with last week’s market share reports from research firms IDC and Gartner, both of which showed Apple gaining more ground in the U.S. IDC had Apple’s 2Q share rising year over year from 6.2 percent to 7.8 percent; Gartner’s data had Apple increasing from 6.4 percent to 8.5 percent.

The biggest surprise was the iPod, which despite a woozy economy and two years of predictions that the product had peaked, pulled out a 12 percent increase in sales year over year, although iPod revenue was up only 7 percent because of a February reduction in the price of the Shuffle models to $49 and $69.

The iPhone numbers were predictably low – a mere 717,000 -- since Apple cut off the supply of the original iPhone mid-way through the quarter to prepare for the launch of the iPhone 3G on July 11.

Some other clues, news and tidbits from the conference call:

Steve Jobs’ health Ben Reitzes of Lehman Brothers apologized for asking the question, but a story in the New York Post yesterday almost guaranteed the subject would come up. Oppenheimer’s response was less than reassuring: “Ben, Steve loves Apple. He serves as CEO at the pleasure of Apple’s board and has no plans to leave Apple. Steve’s health is a private matter.”

Geez Louise, Peter. How about something like “We’re confident Steve will be leading Apple for a long time to come”? Oppenheimer’s stilted, non-committal answer will only serve to fuel more speculation on Wall Street that Steve is very seriously ill, and probably contributed to the 10.8 percent walloping AAPL took in after hours trading last night.

Margins are everything The other reason AAPL shed $18.04 last night almost surely was the lower guidance Oppenheimer gave for the company’s gross margins – from 34.8 percent in Q2 to a still robust 31.5 percent for Q3. You’d think the booming Mac and iPod sales driving record revenues and profits might count for something. Oh, and Apple did sell 1 million new iPhones in three days. And the company always beats its guidance numbers anyway. But noooo. SELL AAPL!!!

The international factor Apple saw significant growth overseas in the June quarter, which could become insurance against a slowdown in its rate of growth in the U.S.

For example, international sales of the iPod grew 15 percent (compared to 10 percent in the U.S.) While the iPod’s U.S. MP3 player market share has stabilized at about 70 percent, Oppenheimer said it has been increasing elsewhere and now stands at over 60 percent in Canada and over 50 percent in the U.K., Japan and Switzerland.

Apple is adding more retail stores overseas as well. One just opened in Beijing with more expected to open in Switzerland and Germany later this year.

Piggy bank full Oppenheimer blew off a question about what Apple plans to do with its ever-swelling cash hoard – now up to $20.8 billion. Sooner or later shareholders are going to demand Apple use it for something, be it stock buybacks, acquisitions of other companies or dividend payments. Even Microsoft is sitting on a mere $24 billion in cash these days.

The iPhone rollout The iPhone 3G is now shipping in 22 countries, with 20 more coming on Aug. 22. Oppenheimer reiterated that Apple expects to have the iPhone 3G available in 70 countries by year’s end. Also, COO Timothy Cook re-confirmed Apple’s confidence that it will sell 10 million iPhones in calendar year 2008.

Posted by David Zeiler at 8:13 AM | Permalink | Comments (6)
                       

The number of Windows users on the Internet continues to erode as the number of Mac users keeps creeping upward, according to data pulled from Net Applications.

When Net Applications released its monthly traffic report earlier this week, many Web sites dutifully reported that Mac OS X’s share of Web traffic had hit a high of 7.83 percent, with Windows slumping to a new low of 91.13 percent. Data for Apple’s Safari Web browser showed that it, too, hit a high of 6.25 percent in May.

Before continuing I must point out that although Net Applications describes its data as “market share,” a more accurate description would be “user share,” as in the percentage of people on the Web using a particular operating system or Web browser. Market share more accurately describes the percentage of people purchasing a product.

The free monthly statistics Aliso Viejo, Calif.-based Net Applications publishes derive from data the company gathers in the course of its business -- measuring Web traffic for its clients. So while not a scientific sample, it’s broad enough to indicate general trends accurately.

In particular this data excels at revealing long-term trends (Net Applications’ Web site conveniently provides data going back two years), and there we find a good bit of positive news for Apple.

The month-to-month data often obscures these trends. For instance, Mac OS X share hit 7.57 percent in January but dropped to 7.46 percent in February and to 7.38 percent in March.

But look at the two-year operating system charts. Since June of 2006, Mac OS X users on the Web have nearly doubled from 4.29 percent to 7.83 percent while Windows users have declined from 95.25 percent to 91.13 percent. (Toss in the iPhone’s 0.16 percent – the device does run OS X, after all – and Mac OS X’s share climbs to 7.99 percent.)

The lines are crooked but the trend is unmistakable – the Mac is relentlessly taking share from Windows.

Most of Windows’ loss of 4.12 percent went to Mac OS X – 3.54 percent – with Linux (0.30 percent), the iPhone and “Other” accounting for the rest.

Yes, the process is very slow and Windows still holds over a 90 percent share, but the numbers tell us Apple’s strategy is working. The Mac is steadily winning converts.

As for the iPhone, its share grew quickly after last year’s introduction, but has slowed in recent months (it was 0.13 percent in January). Net Applications offers no stats on the iPod Touch (probably too infinitesimal to register).

Should Apple succeed in its stated strategy to evolve those products into a new mobile platform, expect to see that success reflected in Net Applications’ monthly reports.

Apple has also made long-term progress on the browser front. Safari’s share of users has nearly doubled from 3.19 percent two years ago to 6.25 percent. The Mac version of Safari has gotten a little boost in recent months from the Windows version (0.28 percent), but most of the increase has come from the growing Mac user base.

If Safari’s rising share does not yet concern Microsoft, Firefox’s should. In two years Firefox has picked up 7.64 percent, rising from 10.77 percent in June 2006 to a very respectable 18.41 percent in Net Applications’ May report.

Internet Explorer, which had a share of about 95 percent as recently as 2003, saw that dominance fall to 84.11 percent two years ago and another 10.36 percent since, to 73.75 percent.

This tells me we could be on the verge of Browser Wars 2.0, this time with Apple’s Safari participating as a significant combatant.

Posted by David Zeiler at 5:18 AM | Permalink | Comments (7)
                       

It’s almost as if Apple had a long-range secret plan to lull Microsoft into a false sense of security while it quietly rebuilt its ability to compete for OS turf.

This week research firm NPD Group announced that Apple dominated the U.S. retail market for high-end computers in the first quarter of 2008, selling two out of every three PCs priced over $1,000.

Echoing trends seen in other market data, NPD said Mac laptop sales saw year-over-year growth over 50 percent, while desktop sales grew 45 percent. During the same period the Windows PC market struggled with zero growth in laptop sales and a 25 percent decline in desktop sales.

NPD estimates the Mac’s overall U.S. market share at 13.8 percent, up from 9.5 percent a year ago.

Before I continue, some caveats: the NPD data dos not include online sales, which is how Dell sells most of its PCs. Nor does it include enterprise sales, where Apple has a negligible presence. And it must be noted that Apple has but one Mac offering in the sub-$1,000 category: the Mac Mini, a small computer that sells without a monitor, keyboard or mouse.

Nevertheless, the NPD data makes it clear that U.S. consumers willing to spend a little more for a computer are choosing the Mac over Windows PCs in rapidly climbing numbers.

Now add this news to last week’s announcement from Microsoft that Office 2008 for the Mac is “selling faster than any previous version of Office for Mac in 19 years.” Since its January launch, the product has sold at three times the rate of the previous Mac release, Office 2004.

The tremendous uptick in sales for the latest Mac version of Office closely mirrors the increase in Mac unit sales since 2004 – Apple sells three times as many Macs now as it did then, with the numbers mounting steadily every quarter.

Until recently, the rise in the Mac’s market share was portrayed merely as stabilization of the Mac OS platform. But the accelerating rate of the Mac’s share and especially the more affluent consumers it continues to lure from Windows is bound to take a toll on Microsoft eventually.

As more consumers buy Macs over PCs, Microsoft sells fewer copies of Windows. True enough, some Mac owners (particularly switchers) do buy retail copies of Windows to run alongside Mac OS X, but not all – probably not even a majority.

Also true: Microsoft makes a boatload of money from Office for the Mac. Still, a significant shift in the Mac/Windows dynamic would have an impact beyond the dollars spent on software.

Think about it. The Mac’s gains so far already have destroyed the psychology that developed in the 1990s that Windows is the only reasonable choice for the average PC buyer.

Thanks to the success of the iPod in establishing Apple as the brand of cool tech, as well as the company’s ever-growing retail presence in upscale shopping malls, PC shoppers are far more likely to consider buying a Mac today than they were three years ago.

Once Apple got the Mac back on the public’s radar screen, its ability to deliver on consumer expectations fed the momentum. The Mac has established itself as not just an alternative to Windows, but now for many a preferable alternative.

What intrigues me are the consequences of the Mac as a legitimate competitor to Windows in the marketplace for the first time in over 15 years (one could argue the first time ever).

I don’t envision a day when Apple vanquishes Microsoft from the OS battlefield, but that won’t be necessary.

If Apple succeeds in winning 20 to 25 percent of the market, Microsoft would lose one of its key assets – the leverage that comes from holding a near-monopoly on PC operating systems. For years Microsoft used that power to bully rivals and promote its own technologies over that of would-be competitors (think Internet Explorer).

Even if Apple’s market share levels off in the low 20’s, it would seriously hamper Microsoft’s ability to impose its will on the computer users both in the home and the workplace.

And what about the workplace? As the Mac becomes the computer of choice in more homes and on more college campuses, more young people entering the work force will question the primacy of Windows in the business world.

Although Apple has so far declined to target business customers, the popularity of the iPhone among executives along with changing expectations of the iPod generation could result in the Mac taking inadvertent bites out of the enterprise market.

Such a turn of events would start eating into Microsoft’s profits. With Apple nibbling at the Windows hegemony and Google jeopardizing the dominance of Office with Google Apps, Microsoft could face threats to both of its cash cows. (Office and Windows comprise about 70 percent of Microsoft revenues).

Not that Microsoft will disappear any time soon, but it would be nice to see them get the wake-up call that mediocrity will not carry the day forever. True competition in the areas Microsoft has dominated for over 20 years would reward consumers with better products from all parties.

Innovation – something about which Apple knows a thing or two -- might matter again.

Posted by David Zeiler at 2:21 PM in Mac market share, Taunting Microsoft | Permalink | Comments (16)
                       

Over the past month investors have reconsidered the selloff in Apple stock that took place in January and February, when AAPL fell nearly $80 from a close of $198.08 on Dec. 31 to $119.15 on Feb. 26.

Helped along by a 228-point rally on Wall Street today, AAPL picked up another $6.55 to close at $161.04, its first close over $160 since Jan. 18.

Concerns earlier this year about slowing iPhone and iPod sales spooked some investors into selling AAPL, but those investors forgot about the Mac. Even back in January when the stock was getting pummeled, both Apple and several of the analysts who follow the company predicted continuing growth in Mac sales.

Sure enough, when research firms Gartner and IDC released their first-quarter reports on PC market share, the Mac’s stellar showing stole the spotlight.

Gartner says Mac shipments increased 32.5 percent, from 762,000 to 1 million units, compared to the same quarter a year ago. According to Gartner Apple snared 6.6 percent of the U.S. PC market compared to 5.2 percent in the first quarter of 2007.

Compared with Gartner’s 2006 numbers, the Mac’s growth trend is even more dramatic. Apple had 4 percent of the market in the first quarter of 2006. Mac unit shipments are up 440,000 from the same period of 2006, a 77 percent increase.

Meanwhile IDC’s data shows Apple with a 6 percent share of the U.S. market in the first quarter, compared to 4.9 percent in 1Q 2007, with unit shipments growing 25.1 percent to 950,000.

It should be noted that Apple’s relative market share changes seasonally. For instance, back in the third quarter of 2007 Gartner reported Apple with 8.1 percent of the U.S. market. But the year-over year increase in units shipped grew at a similar pace, 37.2 percent.

The one consistent element to every research report on the PC market I’ve seen in the past year is that the number of Macs shipped keeps increasing year over year, as does its market share.

When Apple reports its first quarter earnings this coming Wednesday, we’ll find out the truth about iPod and iPhone sales (I suspect the concerns of January will prove unwarranted), and we should get confirmation on the Mac’s soaring numbers.

If it turns out Apple’s core businesses with the Mac, iPhone and Pod continued to do well despite reduced consumer spending and recession worries, expect to see AAPL continue its climb upward.

Jason Schwartz predicted today in a post on the Seeking Alpha site that AAPL could hit $300 in 2009 on Mac sales alone, but gives plenty of reasons why he thinks the company’s other businesses will thrive as well.

While $300 a share might sound crazy, Apple has a long history of transforming the improbable into reality. It wouldn’t surprise me.

Posted by David Zeiler at 5:17 PM | Permalink | Comments (4)
                       

It’s not often you can get ahead by standing still, but Apple could be doing just that based on the latest survey on computer purchasing by Rockville, Md.-based ChangeWave Research.

The data on planned purchases among U.S. consumers and businesses shows Apple with steady numbers and those of its competitors, chiefly Dell and Hewlett-Packard, declining.

Rather than surveying the population at random, ChangeWave takes its samples from among its own 15,000-member “alliance.” It also conducts similar surveys at regular intervals, providing historical data for comparison.

Apple’s numbers are essentially flat from the last survey taken in January (see charts). The most encouraging news is that in the consumer segment, respondents saying they plan to buy a Mac are up more than 50 percent from the March 2007 survey.

Now compare those numbers with Dell’s numbers. Dell laptops are down 2 percent and desktops 4 percent with consumers (32 percent for desktops, 28 percent for laptops. As recently as January 2007, 44 percent of consumers were planning to get a Dell desktop and 34 percent a Dell laptop.

Planned business purchases have fallen to an all-time low (32 percent for laptops and 32 percent for desktops). At its peak in August 2005 Dell’s numbers were 45 percent for desktops and 40 percent for laptops.

HP’s numbers also showed an overall downward trend, particularly in the consumer space, where they’ve dropped from 27 percent for laptops and 28 percent for desktops last March to 19 percent for laptops and 18 percent for desktops in the just-released survey.

Assuming ChangeWave’s data is indicative of general buying patterns, Apple’s earnings should hold steady through the current challenging economic environment. And the Mac’s U.S. market share should continue to rise this year in the periodic IDC and Gartner reports.

Other findings in the ChangeWave survey:

Leopard rules, Vista drools: Of the corporate respondents using the Mac OS X Leopard operating system, 53 percents said they were “very satisfied” with it compared with 40 percent for Windows XP Pro and a sad 8 percent for Windows Vista Business. Linux beat both flavors of Windows with 44 percent.

The survey also asked corporations about their plans to adopt Vista. Only 18 percent said they were not planning to “slow adoption of Vista,” while 26 percent they were “somewhat likely” or “very likely” to slow adoption of Microsoft’s newest version of Windows. And a remarkable 43 percent said they had no plans to adopt Vista in the next 12 months.

If Apple successfully breaches the enterprise market with the iPhone, it might ponder pitching Macs to businesses. The sort of widespread rejection of Vista evident in the ChangeWave survey could encourage corporations to consider the Mac alternative just as consumers have.

Mac desktops surge: In the portion of the survey covering PCs purchased in the previous 90 days, Mac desktops showed stunning strength among consumers, with 21 percent saying they had bought a desktop Mac. Not only did Mac desktops gain 5 percentage points from January, the number tripled – yes, tripled – from March 2007. (The Mac laptop percentage among consumers dropped 1 point to 16 percent.)

And a bit of bad news: While most of the data in the ChangeWave survey is positive for Apple, I found one troubling anomaly. Alone among PC manufacturers, Apple’s numbers in the segment in which respondents report which brand of PC they purchased in the previous 90 days tend to be about half what they are in the planned purchases segment.

For example in the November survey, 29 percent of consumers said they’d buy a Mac laptop in the next 90 days but in the current survey only 16 percent did so. The desktop numbers are closer (29 percent planned, 21 percent bought), but it’s still a significant gap.

Such discrepancies don’t appear in the data on other PC manufacturers. Back in November 31 percent of consumers said they’d buy a Dell desktop in the next 90 days; in the current survey 28 percent said they did in fact buy a Dell desktop.

The laptop numbers are almost spot on: 28 percent said they planned to purchase a Dell laptop in November; in the current survey 27 percent said they did.

Apparently, potential Mac buyers are more likely to change their minds than potential buyers of other brands. But why?

Did they see ads for bottom-of-the-barrel PCs and conclude Macs cost too much? Are they Windows users fearful of making the switch? Or is it something else?

Whatever the cause, it would behoove Apple to invest some effort in figuring it out. Those lost customers translate to lost market share, lost revenue and lost profits.

Posted by David Zeiler at 5:22 AM in Mac market share | Permalink | Comments (3)
                       

Not only are Apple’s three primary businesses each doing extremely well, but each retains significant potential for growth, Tim Cook, the Cupertino company’s chief operating officer said yesterday.

In a wide-ranging question-and-answer session at the Goldman Sachs Investment Symposium in Las Vegas, Cook fielded queries about “missing” iPhones, the possibility that the iPod market has become “saturated,” why the Mac’s market share has seen explosive growth and what Apple hopes to achieve with the Apple TV.

Much of what Cook had to say wasn’t new, although it was far more engaging than the sleepy, redundant comments he and CFO Peter Oppenheimer serve up to analysts during those quarterly earnings conference calls. Frequently he sounded very much like the Apple cheerleader he is paid to be, but at times Cook offered clues about Apple’s broader strategies.

Let’s look at what Cook said by category (he switched among topics frequently during the session, which you can hear for yourself here):

The iPhone: Cook said the iPhone has received the highest customer satisfaction ratings of any product Apple has ever shipped, a notable achievement for a company that routinely scores very highly in customer satisfaction.

When asked a question that has been buzzing on the Web for weeks – what’s become of the million or so iPhones Apple said it has sold but have never been activated – Cook acknowledged most of them have found their way to countries in which the iPhone is not yet available.

Without addressing the shared revenue Apple loses from its partner carriers when an iPhone is unlocked for use on another network, Cook said the company “smiles” at the problem. “It means there’s great demand for the iPhone,” he said.

The company will apply the lessons it has learned from selling the iPhone in the U.S. and three European countries as it proceeds with plans to expand availability of the product elsewhere in Europe and in Asia this year, Cook said.

Most intriguingly, he said Apple is not “married to any business model,” suggesting Apple could deviate from having one exclusive carrier per country. Cook explained that different market conditions could require a “different business model,” and in some places “being exclusive might not be in our best interests.”

This may be the first public indication that Apple is considering different approaches to the iPhone-carrier model, at least in some nations. However, Cook only had nice things to say about Apple’s relationship with AT&T, a disappointment to those hoping for a re-evaluation of the exclusivity deal in the U.S.

Cook indicated Apple expects the issue of unlocked iPhones to diminish as the device becomes available in more countries, and ominously hinted at a “series of actions” aimed at thwarting iPhone hackers (presumably those unlocking it, not those installing software on it).

Better news for iPhone owners was Cook’s frequent references to the week-overdue announcement and release next Wednesday (March 6) of the iPhone SDK, which will permit developers to write software legitimately for the iPhone and iPod Touch.

The iPod: Cook reiterated Apple’s position that the iPod Touch is a fresh platform for the company and that developing that platform is a priority. He artfully answered a question about flat iPod sales in the holiday quarter by pointing out that while unit sales increased by only 5 percent, revenues increased by 17 percent, primarily due to the higher margins on the iPod Touch, introduced only last fall.

Meanwhile sales of the low-end, lower margin Shuffle slipped 17 percent worldwide. Cook said Apple cut the price on the Shuffle to $49 Feb. 19 because “we believe there’s elasticity in the market,” whatever that means. He added that the price drop should boost sales a bit in “emerging markets” (such as China and India) as well as in the U.S.

The Mac: “The ceiling for the Mac is nowhere in sight,” Cook said in discussing the Mac’s market share. He noted that Apple sold 7 million Macs in a PC market of 260 million, leaving a lot of room for further growth.

In responding to a question asking why the Mac has become more popular with customers – he said the platform grew 44 percent in the last quarter alone – Cook described the Mac’s gains as “almost a movement.” He continued: “I think it’s gone, in many people’s minds, to asking not why buy a Mac, but why not?”

He cited two statistics showing the Mac’s resurgence in the education market. One was Student Monitor’s annual survey of college students conducted each summer asking which type of computer they planned to buy; this past summer those who said they were buying a Mac rose to 44 percent, 20 points higher than the previous year. Cook gave no source for the second statistic but said the company learned Monday that “Apple has surpassed Dell as the number one supplier of portables to higher education for 2007.”

Apple TV: Cook waffled a bit on the Apple TV, last year described by CEO Steve Jobs as a hobby and the low sales of which led to some Apple critics deriding it as a failure. “We say no to a lot of things,” he said in explaining why Apple expended resources on developing Apple TV. “We do products where we can make a difference and where we control the primary technology.”

Later Cook acknowledged Apple TV is a “niche product,” but said the company thinks that “something cool cold come out of this product.” He essentially admitted the company had erred in treating video like music, expecting customers to buy video as they buy music at the iTunes Store.

Somehow Apple missed that most people watch movies just once and would rather rent than buy them (wasn’t Blockbuster a big enough hint?) The availability of movie rentals combined with the recent changes to Apple TV – essentially releasing it from the bonds of the PC so it can download movies directly from the Internet –sets up the video realm as “an area that could be big for us,” Cook said.

Posted by David Zeiler at 4:58 AM | Permalink | Comments (8)
                       

The Mac’s resurgence will continue over the next several years, according to Gartner research, resulting in the platform’s doubling its market share in the U.S. and Western Europe by 2011.

That prognostication led off Gartner’s list of 10 key predictions for the tech industry the firm released yesterday. While crediting Apple’s business model for much of the Mac’s success, Gartner notes that “failures” of Apple’s competitors also are playing a part. Here’s what the company had to say:

“By 2011, Apple will double its U.S. and Western Europe unit market share in computers. Apple's gains in computer market share reflect as much on the failures of the rest of the industry as on Apple's success. Apple is challenging its competitors with software integration that provides ease of use and flexibility; continuous and more frequent innovation in hardware and software; and an ecosystem that focuses on interoperability across multiple devices (such as iPod and iMac cross-selling).”

Gartner has figured out what veteran Mac users have known for years. The Mac’s ease of use holds great appeal to people who just want a computer that does what it’s supposed to do. That demographic includes most home users, which is where the Mac has made most of its gains.

Gartner doesn’t name names after citing the “failures of the rest of the industry,” but it’s obvious the primary guilty party is Microsoft. Dashing expectations after years of anticipation, the latest version of Windows – Vista -- has met resistance in its first year of release. Many PC vendors, including Dell, had to start offering XP as an option on new PCs.

But the Gartner statement hints at more than the PC industry’s missteps; if you read between the lines, it’s also an indictment of the PC business model. That would be the chaotic system in which one company makes the operating system (Microsoft) while many others build the hardware (Dell, HP, Lenovo, Acer, Toshiba, Sony). And that doesn’t include all the third-party peripherals that may or may not work with your Windows PC.

Apple has long endured criticism for its vertical integration philosophy. “If only Apple would open up its hardware and software, it could compete and gain market share,” they would opine.

Of course, Apple did allow clone making briefly in the mid-1990s, but instead of growing the Mac’s market share the clone-makers gobbled up Apple’s best customers. Steve Jobs killed that bad idea shortly after his return in 1997.

Now Gartner is lauding Apple’s “software integration” and its “ecosystem that focuses on interoperability across multiple devices.” Apple’s ability to integrate its hardware, software and peripherals is what makes it all work so well. Somebody finally gets it.

One other prediction on Gartner’s list also bodes exceptionally well for Apple. By 2012, the company predicts half of traveling workers “will leave their notebooks home in favour of other devices.”

Gartner explains that workers will tire of notebooks’ size and weight: “Vendors are developing solutions to address these concerns: new classes of Internet-centric pocketable devices at the sub-$400 level; and server and Web-based applications that can be accessed from anywhere.”

Again, Gartner does not mention any names. Can you think of any devices that fit the criteria? Name begins with an “i”? Yep, the iPhone fits the bill perfectly, right down to its $399 price tag. But the $299 iPod Touch, particularly with its newfound software capabilities (mail, maps, weather, notes and stocks), may fit the bill even better.

Apple knows it and is already poised to exploit it. CFO Peter Oppenheimer referred to the iPod Touch as “an entirely new type of iPod” in his comments during Apple’s earnings conference call last week. “This new iPod has the potential to grow the iPod from being just a music and video player into being the first mainstream WiFi mobile platform running all kinds of mobile applications.”

While other companies surely will be competing in this space, Apple is the best equipped to make it work as people will expect it to work; its expertise in hardware-software integration will prove an immense advantage here. In a few years, the iPod Touch, along with the iPhone, could completely dominate this sector.

Just FYI, AAPL closed at $133.75 today.

Posted by David Zeiler at 6:29 PM | Permalink | Comments (3)
                       

The latest report from Rockville, Md.-based ChangeWave Research reflects customer satisfaction running in opposite directions for Vista and Leopard, the newest version of the Mac operating system.

An amazing 81 percent of customers of those who purchased a Mac in the previous 90 days said they were “very satisfied” with it. This compares to 27 percent of PC buyers who got Vista Home Premium on their new PC and a pathetic 15 percent of those who bought PCs with Vista Home Basic pre-installed.

According to the ChangeWave report, “Leopard’s high customer satisfaction not only dwarfs its competitors, but it’s having a direct impact on customer intentions to purchase an Apple computer. More than one-in-four respondents (26 percent) say the Leopard OS makes them more likely to buy an Apple computer in the future.”

Seemingly contradicting the IDC and Gartner reports released earlier in the week that showed the Mac’s market share slipping a bit from the third quarter to the fourth, the ChangeWave data showed an increase in Mac buyers. Of those who bought a computer in the past 90 days, 17 percent (up from 14 percent) said they bought a Mac laptop and 16 percent (up from 10 percent) said they bought a Mac desktop.

Looking ahead, of those respondents who said they planned a PC purchase in the next 90 days, 33 percent said they’d buy a Mac laptop and 29 percent a Mac desktop. The laptop number is up from 29 percent in November and from 20 percent a year ago. And that survey was taken before the MacBook Air was announced.

The Mac’s desktop number of planned purchases stayed the same (it was also 29 percent in the November survey), but has risen from 18 percent in the January 2006 survey.

But why does the Mac do so much better in the ChangeWave surveys than in the more conventional measures of market share conducted by IDC and Gartner? The data from those surveys put the Mac’s fourth quarter market share at about 6 percent.

The Mac excels in the ChangeWave data because in this particular survey, the focus is on consumer purchases rather than overall PC purchases. Removing corporate buying from the equation shows just how much progress the Mac has made with the average PC consumer.

Meanwhile, dissatisfaction with Windows Vista has grown so severe that tech Web site InfoWorld has launched a petition to Microsoft to keep selling its predecessor, Windows XP, past the planned June 30, 2008 deadline.

“Millions of us have grown comfortable with XP and don't see a need to change to Vista,” InfoWorld Executive Editor Galen Gruman writes. “It's like having a comfortable apartment that you've enjoyed coming home to for years, only to get an eviction notice.”

Well, as a Mac user I can’t explain the love for Windows XP, but apparently lot of Windows users share Gruman’s sentiments – 30,000 had signed the online petition as of 5 p.m. Jan. 17.

Posted by David Zeiler at 12:57 PM in Mac market share, Taunting Microsoft | Permalink | Comments (10)
                       

Research firms IDC and Gartner have released their quarterly market share data and the news for Apple, for the first time in a while, is mixed.

Looking at U.S. market share (Apple doesn’t show up in either company’s worldwide data), the Mac gained year-over-year, but slipped from the third quarter to the fourth.

According to Gartner, Apple shipped 1.035 million Mac units in the U.S. in the fourth quarter of 2007 for an increase of 227,000 over the fourth quarter of 2006. Market share increased a full percentage point, from 5.1 percent to 6.1 percent.

But in October Gartner reported 3Q Mac sales of 1.338 million, which means Apple shipped 303,000 fewer Macs this past quarter. Market share quarter-over-quarter fell 2 full percentage points, from 8.1 percent to 6.1 percent. That’s not good.

The data from IDC looks about the same. It shows Apple shipping 1.058 Macs in the U.S. in the fourth quarter, an increase of 250,000 over 2006. IDC’s numbers put the Mac’s market share at 5.7 percent, up from 4.7 percent in the 4Q 2006 -- like Gartner’s up a full percentage point year-over-year.

And like Gartner’s data, IDC shows a drop from quarter to quarter. In October IDC gave Apple a 6.3 percent market share, about half a percent higher than the 5.7 percent it reports the Mac had in the fourth quarter.

Does this mean the Mac’s comeback has hit a brick wall? Or is it a statistical hiccup?

At this point, it’s probably too soon to tell. I will hazard a guess that strong back-to-school laptop sales in the third quarter gave Apple an exceptional boost and holiday Mac sales simply couldn’t match it.

We’ll find out more when Apple reports its quarterly earnings next Tuesday (Jan. 22).

Posted by David Zeiler at 1:10 PM in Mac market share | Permalink | Comments (3)
                       

The monthly data from Net Applications was released today – yes, New Year’s Day – and it shows that the Mac has eked out another incremental gain in share.

California-based Net Applications doesn’t measure market share by units sold, as do other research companies, but by sampling traffic data from its client Web sites.

For December the Mac’s share of Internet traffic was 7.31 percent, up from 6.8 percent in November. An incremental gain, but if you look at where the Mac’s share was in December 2006 – 5.67 percent – you can see the results of a steady upward trend throughout 2007. If you go back to January 2006 (the earliest data available on Net Application’s Web site), the Mac had only a 4.21 percent share.

That’s a major leap for the Mac platform, and jibes with traditional market share data from research firms Gartner, which put the Mac’s U.S. share at 8.1 percent in October and IDC, which put it at 6.3 percent. As with the Net Applications data, both numbers were increases from previous reports.

(The iPhone, by the way, shows up in the Net Applications report with a share of 0.12 percent, up from 0.09 percent in November and 0.07 percent in October. Watch for iPhone share of Web traffic to shoot upward in 2008 and beyond.)

Almost every measure of market share in 2007 has shown the Mac gaining. If 2008 proves as good to the Mac as was 2007, we could see reports by the end of the year that show Mac market share in double digits.

Posted by David Zeiler at 1:51 PM in Mac market share | Permalink | Comments (1)
                       

Apple has done a great job of marketing the Intel-based Macs ability to run Windows, but has confused some ordinary users into thinking all new Macs come with a built-in ability to run Windows software and use third-party devices designed only for Windows-based PCs.

Twice this week I have had co-workers seek my counsel with this type of query. Both had bought peripheral devices for a Mac user before discovering the device was not Mac compatible.

Both said they had heard new Macs could run Windows and expressed hope the destination Macs still would be able to use the devices. I had to tell them that while the newer Intel-based Macs can indeed run Windows, the user must buy and install a retail copy of Windows to enable that capability.

Though disappointed, they understood.

I’m not sure what Apple should do to clarify this point for its growing legions of non-technical users, but it might behoove Cupertino to give it some thought. People who hear “Macs can now run Windows” not unreasonably may expect it to do so out of the box.

Apple does not need thousands of annoyed customers calling its tech support personnel to ask why this or that Windows thingy won’t work with their new Mac, only to be told the feature requires a bit more money and effort on their part.

Of course, the real culprit in this scenario is neither Apple nor the innocent user, but those companies that continue to manufacture third-party peripherals incompatible with Macs.

In this blog I have noted often the Mac’s steadily increasing market share, particularly in the United States. Those market share increases are coming mostly from consumers switching from Windows – consumers who buy lots of peripherals.

When the Mac’s market share was mired in the sub-5 percent zone, it was easy for tech companies to dismiss it. The numbers for the Mac this year have consistently shown growth; in October Gartner reported overall Mac share at 8 percent (which translates to much higher consumer market share, given the Mac’s low profile in the business world). Last week ChangeWave Research released data from November revealing that 29 percent of those who intend to buy a computer in the next 90 days would choose a Mac.

At some point the Mac user base will become too large to ignore with impunity. Companies that refuse to make their peripherals Mac compatible will start to lose business to the ones that do. Such market forces eventually should make the absence of Mac compatibility among peripheral devices a rarity.

Perhaps someday we’ll even see “Not Windows Compatible” devices. Heh heh.

Posted by David Zeiler at 12:34 PM in Mac market share, Taunting Microsoft | Permalink | Comments (6)
                       

Reinforcing other recent reports of the Mac’s continued strength in the market, a survey taken in early November by Rockville, Md.-based ChangeWave Research indicates that more potential buyers than ever plan to buy a Mac in the near future.

Of the respondents who said they planned to buy a computer in the next 90 days, 29 percent said they’d get a Mac laptop and another 29 percent said they’d get a Mac desktop.

Apple’s laptop number is actually the highest in the survey – Dell came in second at 28 percent, followed by Hewlett-Packard at 21 percent. Amazing.

On the desktop side, Dell was first with 31 percent with Apple’s 29 percent good for second. Hewlett Packard was third with 24 percent.

The numbers are even more impressive when compared to the historical data in the survey. In September 2006, only 17 percent were planning on buying Apple laptops and 18 percent Apple desktops. If you go back to October 2005, the numbers fall to 16 percent for laptops and 11 percent for desktops.

Questions on customer satisfaction offered at least one clue as to why Macs have grown more popular – Apple leads in this category by a huge margin.

A chart showing the percentage of respondents who were “very satisfied” shows Apple with 80 percent, far ahead of all the PC vendors, which range from Dell at 61 percent to Lenovo at 49 percent. Another 18 percent were “somewhat satisfied.” Only 2 percent were “very unsatisfied” with zero reporting in the “somewhat unsatisfied” category.

The combined “unsatisfied” scores for Apple’s rivals ranged from 6 percent for Dell to 14 percent for Lenovo.

Still more positive news for the Mac turns up in the operating system segment of the survey.

Asked if Leopard, the latest version of the Mac OS X, would make them “more likely” or “less likely” to buy an Apple computer in the future, 24 percent said “more likely” while 66 percent said it would have no effect. None said it would make them less likely to buy a Mac.

Another question asks. “Which operating system would you like to have preinstalled on the computers(s) you plan to buy in the next 90 days?”

Leopard was the choice of 28 percent – the highest individual number, though the Windows percentages were split by the assorted flavors of Vista and XP. Vista’s totals add up to 42 percent, with Vista Home Premium the choice of 20 percent.

Microsoft might be concerned that more than a year after the launch of Vista 40 percent of potential PC buyers would prefer Windows XP on their new computer.

As pleased as any Mac loyalist would be with these survey results, one must wonder a little at how Apple’s numbers could be so high, particularly the percentages of people planning to buy Macs. Even the most optimistic U.S. market share surveys have pegged the Mac at only about 8 percent overall, with about 12 percent of the laptop market.

How could 29 percent of a survey sample be planning to buy Macs? It just doesn’t seem possible.

It turns out it depends on who you survey. ChangeWave does not randomly select its samples, but queries a group of 13,000 “senior technology and business executives in leading companies” it calls the “ChangeWave Alliance.”

This explains why Apple does so well in its surveys – what else would you expect from such a group of highly educated and tech-savvy people?

It also bodes well for Apple much further into the future than the 90 day period asked about in the survey. The members of the ChangeWave Alliance are the type of people others look to for leadership and guidance. If nearly one in three of them are going Mac, it could signal a substantial increase in Mac market share over the next year or two, perhaps to the mid-teens or beyond.

It’s almost scary, isn’t it?

Posted by David Zeiler at 9:07 AM in Mac market share, Taunting Microsoft | Permalink | Comments (4)
                       

The other day I received a message from a coworker with this in the subject field: “OK, I’m going Mac.”

Another colleague fed up with Windows-based PCs is seeking my aid on switching to the Mac.

Having written about Apple and the Mac for the Baltimore Sun on and off for the past decade, I have become a handy resource for my colleagues at the newspaper whenever they have questions about Apple products.

Over the years nearly all of those questions have come from fellow Mac users with a particularly vexing problem with their Mac at home, although I’ve done more than my share of Mac troubleshooting in the newsroom (shhhh, don’t tell our IT department).

But over the past six months or so I’ve helped half a dozen coworkers who wanted to ditch their Windows PCs at home for a Mac. I realize this is anecdotal, completely unscientific evidence, but since such queries were rare before this year I’m counting it as further evidence that the Mac is making significant headway in the consumer market.

The reasons these folks have given me for switching from Windows -- which in most cases they have always used -- reflect points Apple has emphasized in its advertising campaign. They’re tired of PCs that get so gummed up with spyware, viruses and adware they become unusable. They’re tired of peripherals that are supposed to work but don’t. They’re tired of struggling with Windows, and are reluctant to buy a new PC because it means learning the new foibles of Vista, Microsoft’s most recent version of the OS.

At the same time, Apple’s powerful brand made enough of an impact to get them to consider the Mac as an alternative. They’ve witnessed the hype around the iPhone and noticed the dominance of the iPod in the portable music player market. Several visited an Apple Store before they made up their mind. In short, Apple’s strategy is succeeding.

Best of all, everyone who has switched has been glad they did. They’re mostly surprised that a home computer can be as hassle-free as the Mac generally is. They’re converts who will likely tell their friends about their positive experiences.

The Mac’s steadily growing U.S. market share numbers indicate this sort of thing must be happening more and more, and could be ready to snowball as we head into 2008.

Microsoft, watch your back.

Posted by David Zeiler at 2:01 PM in Mac market share, Taunting Microsoft | Permalink | Comments (22)
                       

Today Apple announced it sold more than 2 million copies of Mac OS X 10.5 Leopard in its first weekend. “Early indications are that Leopard will be a huge hit with customers,” said CEO Steve Jobs in the press release, though he might be just a teensy bit biased.

I’m guessing Apple is seizing this opportunity to gloat because demand for Leopard – like the iPhone -- will never be so high as on its first weekend.

But whether 2 million is a big number depends on how you look at it. For example, Leopard’s achievement compares very well to its predecessor, Mac OS X 10.4 Tiger, which took 5 weeks to sell 2 million copies.

Comparing Leopard to Vista, the latest incarnation of Microsoft’s Windows, shows the value of holding more than 90 percent of the operating system market. Though widely criticized, Vista sold 20 million copies in its first two months – nearly the same number as every Leopard-capable Mac in existence. (Apple Chief Operating Officer Timothy Cook estimated during the company’s recent earnings conference call that currently about 21 million Macs are Leopard capable – an impressive number considering the large number of older Macs that do not meet Leopard’s minimum specs.) Windows XP sold 17 million copies in its first two months back in 2001.

During Microsoft’s recent earnings conference call, the company reported that 85 million licenses for Vista had been sold this year. True, most of those were pre-installed on Windows PCs sold by the likes of Dell and Hewlett-Packard, but still. It’s a daunting number from the Mac perspective (not to mention the even smaller number of fans of the Linux OS).

Then again, Leopard already has been hacked to run on ordinary Windows PCs. Apple surely won’t be happy about it, but what if it catches on? We might well hear Apple report at their January earnings conference call that hundreds of thousands of copies of Leopard were “purchased with the intent of being run on non-Apple hardware.” How crazy would that be?

Posted by David Zeiler at 3:49 PM in Mac OS X, Mac market share | Permalink | Comments (2)
                       

Macs continue to gain ground in U.S. market share, but how much exactly?

Research companies IDC and Gartner both have released their third quarter reports on PC market share. They agree the Mac has picked up U.S. market share from Windows-based PCs, but disagree on how much.

Gartner reports a 37.2 percent increase year-over-year in total Mac units sold (including notebooks and desktops) in the U.S., from 975,000 in 2006 to 1,338,000 in 2007. The increase raises the Mac’s market share from 6.2 percent to 8.1 percent, the largest overall U.S. market share number I’ve seen for the Mac in a very long time. It puts Apple in third place behind Dell with 29.1 percent and Hewlett-Packard at 25.7 percent. Trailing Apple are Toshiba (5.7 percent ) and Gateway (5.2 percent).

IDC puts Apple’s U.S. sales at 1,127,000 Macs in the third quarter of 2007 compared to 973,000 in 2006. That makes Apple’s market share 6.3 percent -- an improvement over the 5.7 percent it had in the third quarter of 2007 but significantly lower than Gartner’s number.

Why is Gartner’s Mac market share so much higher? And who’s right?

Somehow IDC arrived at lower sales for Apple than Gartner did while figuring higher sales for both Dell (5,010,000 units versus 4,833,000) and H-P (4,346,000 versus 4,260,000). Apparently the methodologies IDC and Gartner use differ significantly, though the companies’ press releases contained no clues as to how they calculated their numbers. And both companies advise that these figures are preliminary estimates that precede the actual data the PC companies will release in their earnings reports over the next few weeks.

The real data from the PC companies will give us a more accurate picture of what’s going on, but we never seem to get definitive agreement from the research companies and survey organizations.

Discrepancies aside, one trend appears indisputable: the Mac’s market share has been rising for the past two years. If Apple can keep the momentum going it could crack double digits in U.S. market share for the first time since the early 1990s.

Posted by David Zeiler at 3:35 PM in Mac market share | Permalink | Comments (0)
                       

I have long suspected that Macs had made more headway in capturing market share than the periodic research reports have indicated. Finally, we have a report that explains why.

A Bernstein Research report by Toni Sacconaghi, Jr., which I discovered via Philip Elmer-DeWitt’s Apple 2.0 blog at Fortune, provides some fresh numbers on the Mac, particularly its laptops.

The Bernstein report differs from other market share reports I’ve seen in that it breaks the data into five price “quintiles.” Mac laptops have a whopping 29.4 percent of the top quintile (machines over $1,300) and 9.3 percent of the second. When you drop the two quintiles in which Apple does not compete (the bottom two fall under $1,100), Mac laptops still net a 13.8 percent market share in the U.S. While still a long way off from parity with the Windows competition, these numbers jibe better with real-world observations than the 5 to 6 percent numbers that reflect sales of mountains of cheap PCs to businesses.

One of the charts included in the Bernstein report includes a line that breaks out Apple’s U.S. market share in the highest price category in the education and consumer markets, excluding the corporate market that the company historically has ignored. Mac laptops comprise 45.8 percent of that market. Wow.

While anecdotal proof for the Mac’s increasing popularity has been building for several years, the market share numbers have not reflected what seemed obvious. True, the Mac’s overall market share has doubled since 2004 (from 3.2 percent in the U.S. to 6.7 percent and from 1.8 percent worldwide to 2.9 percent, according to Gartner data), but all those glowing Apple logos on laptops on college campuses, at technical conferences and in public Wi-Fi areas argued for higher numbers.

Apple’s laptop share worldwide has shown a similar pattern. Mac laptops do best in the highest price quintile with 11.2 percent, and have 8.1 percent of the second most expensive one. Mac desktops have 8.1 percent of the top quintile of the global market (but almost nothing in the other four). While these figures are far from dominating, compared to Apple’s scrawny worldwide share overall, they’re startling.

Another surprise in the Bernstein report is that Apple’s surge in the high-priced categories is a relatively recent phenomenon. In 2000, Mac laptops held 3.6 percent of the top quintile in the U.S. and 4 percent of the second. The highest percentage, 6.1 percent, was in the lowest-priced quintile. By 2004, the Mac laptops had risen to 7.6 percent of the top quintile and 7.2 percent of the second. That year Apple had the highest share in the third quintile at 9.7 percent.

Despite what appears to be great news for Apple laptop sales – rapidly increasing market share in the highest-priced, most profitable quintiles -- Sacconaghi’s report points to dark consequences. It views Apple’s rapidly increasing share of the pricey end of the laptop market as a limiting factor to growth in the years ahead, particularly in light of the Mac’s increasing average price versus that of a typical PC laptop.

I had almost forgotten this, but the iBook a few years ago started at $999. The increase in price of the entry-level MacBook to $1,099 combined with the perpetual fall of Windows-based laptops has had the net effect of making Macs more and more expensive relative to their PC counterparts. Sacconaghi theorizes this will narrow the potential market for Mac laptops and pressure Apple to drop the entry-level price back to $999 or lower to perpetuate the rate of growth it has enjoyed over the past two years. Combined with Apple’s determination not to go after the corporate market, further limiting its overall market share growth, I have to concede that Mac laptop sales could hit a wall at some point.

Sacconaghi does not note in his report that Mac laptops, while costlier on average when compared to the entire Windows PC market, are priced about the same as PCs of comparable abilities (Charles Gaba’s System Shootouts site has many examples of this). Apple refuses to make cheap Macs because it wants to maintain its image as a maker of quality computers and because it disdains low-margin hardware. But in doing so, Apple has written off a significant chunk of the PC market.

This could present a problem as Apple’s market share grows, but one of the notable aspects of the company’s recent increases in market share is that they have come despite the higher average selling prices of Macs. Consumers are voting for the Mac with their pocketbooks, and there are no signs yet the trend is slowing.

Even if Sacconaghi’s scenario materializes (he projects sales into 2011), Apple’s generous margins always give it the option of prudent price cuts to goose market share. Case in point: the controversial $200 iPhone price cut resulted in a sustained 56 percent increase in sales, according to Piper Jaffray’s Gene Munster.

But for the near future, I see Apple standing pat. Wall Street should be more than satisfied with the boatload of good news Apple will deliver in its fourth quarter earnings report Oct. 22.

Posted by David Zeiler at 2:18 PM in Mac market share, MacBook | Permalink | Comments (4)
                       

Few topics in the Mac universe engender more confusion than market share numbers. The almost infinite ways to measure market share – who’s buying, where they’re buying (Internet vs. brick and mortar), laptops vs. desktops, aggregate metrics from Web sites, raw sales data from all the PC manufacturers – make any accurate assessment almost impossible.

So I was amused yesterday when many Mac Web sites celebrated the latest numbers from California-based Net Applications, which each month measures market share of Web browsers and operating systems. The company’s September data shows Mac OS Web traffic at 6.61 percent (a combination of 3.38 percent for PowerPC-based Macs and 3.23 for Intel-based Macs). Everyone seemed pleased that the Mac OS share had risen almost a half a percentage point from 6.15 percent in August and more than a point from 5.21 percent last October.

But if you look at the data for each month over the past year, the achievement looks less impressive. The Mac OS had a combined share of 6.22 per percent as early as January. It has hovered between 5.97 percent (July) and 6.46 percent (May) all through 2007. Perhaps the best thing that can be said for the September number is that it is the highest so far this year, but by a statistically insignificant amount.

The numbers for Safari, Apple’s Web browser, are similar. Safari’s share edged up to 5.07 percent from 4.68 percent in August. Last October Safari had just a 3.93 percent share of Web surfers. But Safari had 4.85 percent in February and 4.82 percent in May so September’s jump, while the highest of 2007, does not represent a significant gain in market share for Safari.

Earlier today an outfit called W3Counter released comparable statistics showing the Mac OS representing a mere 3.77 percent of Web traffic. That’s unchanged from W3Counter’s August number, and a slight drop from the 3.91 percent the Mac OS recorded in May. In the browser category, Safari had a lowly1.77 percent share.

Why the discrepancy? Apparently the two companies are measuring traffic on different Web sites, though nether gives a lot of details on which sites they measure. Since both are in the business of supplying traffic data to customers, one assumes the statistics come from each company’s respective roster of clients. If true, that’s not a scientifically reliable way to sample market share of operating systems and browsers.

For its part, W3Counter provides evidence that their data is skewed toward the unreliable. The nation category shows tiny Latvia as the country generating the fourth-most Web traffic, ahead of Canada, the Philippines, France and Australia.

Taken individually, no data on Mac market share can offer definitive evidence of the platform’s progress against Windows. Nevertheless, most surveys and reports released over the past year or so have shown the Mac making headway, albeit slowly.

We’re unlikely to see any sudden, dramatic surges in Mac market share over the next year or two – Apple’s disinterest in pursuing the enterprise (business) market precludes any large gains -- but expect to see gradual growth as more and more consumers look to the Mac as a viable alternative to Windows.

What would be really interesting is a survey showing how the Mac’s market share has increased among consumers, omitting all those Dells in the workplace. Any takers?

Posted by David Zeiler at 3:27 PM in Mac market share | Permalink | Comments (3)
                       

Mac laptop sales are taking off, and it’s only going to get better.

That’s what data released earlier this week by ChangeWave Research seems to be saying. ChangeWave, a Rockville, Md.-based company that conducts surveys of business executives and professionals in more than 20 industries, just released the results of its Aug. 1-8 survey on computer sales.

According to the ChangeWave data, Apple laptop sales over the previous 90 days rose from 12 percent in the June survey to 17 percent while desktop sales dropped slightly from 8 to 7 percent. I would guess that the anticipation of new iMacs (unveiled August 7) stunted sales slightly in the most recent survey. ChangeWave also asks about planned computer purchases. Here Apple laptops remained steady at 28 percent, with desktops actually rising one point from 22 to 23 percent.

Far more compelling than the changes since June is the steady growth in the Mac numbers since January 2006. Back then Apple’s laptops and desktops both comprised just 4 percent of sales over the previous 90 days. The laptop numbers have quadrupled in just over 18 months, while the desktop numbers have doubled.

In the planned purchases survey, laptops stood at 13 percent and desktops at 11 percent back in January 2006. Both of these numbers also have more than doubled.

Long-time Mac users who recall Michael Dell’s infamous 1997 insult should relish Dell’s numbers from the survey of purchases over the previous 90 days. Dell’s laptops have sunk from 44 percent in January 2006 to 30 percent in the most recent survey. But hold your jeers and taunts until you read this: Dell desktops have plummeted from 43 percent to 24 percent.

This is all fantastic news for Mac fans, but can we trust these numbers? The ChangeWave data is not based on a conventional survey of randomly chosen respondents, but rather a periodic survey of a select group of people. ChangeWave describes them as “10,000 strategically positioned experts.” I’m not an expert on polling, so I can’t say if that makes this data more or less relevant. But when you look at this survey in the context of previous computer sales data that also points to ever-growing Mac sales, especially of the laptops, you see a trend confirmed.

My instinct is that a survey of business executives and professionals about computer buying should at least indicate which way the sales winds are blowing. If there’s any weight at all to this ChangeWave survey -- and I believe there is -- those winds are plainly at Apple’s back.

Posted by David Zeiler at 2:33 PM in Mac market share | Permalink | Comments (2)
                       

For the past several years, the tech world’s obsession with the iPod and now the iPhone has obscured a much more remarkable aspect of Apple’s ongoing success: the revival of its Macintosh business. After losing market share to PCs running Microsoft’s Windows operating system for most of the 1990s, the introduction of the first iMac in 1998 stopped the bleeding, and the past year has shown a powerful Mac resurgence. In Apple’s third quarter earnings report released yesterday, sales of Macs reached 1.76 million units, an all-time high that broke the previous record by 150,000 units. That’s a nifty 33 percent year-over-year increase. Apple CFO Peter Oppenheimer cited IDC data during yesterday’s conference call that indicated Mac sales are growing four times faster than Windows PC sales in the United States, and two times faster than PC sales globally. That means the Mac is slowly but surely gaining market share.

Looking at Mac sales from just a few years ago you can see how far the Mac has come. In the third quarter of 2002, Apple sold 808,000 Macs, and that was a 2 percent drop year over year. In 2003, Mac sales fell 5 percent year over year to 771,000, less than half the number of Macs sold in the most recent quarter. But the tide turned in 2004: Apple sold 876,000 in the third quarter that year, a 14 percent gain, and 1.18 million in 2005, a 35 percent increase.

The 33 percent increase in year-over-year units sold in Q3 is consistent with the gains of the previous three quarters: a 36 percent increase in Q2 of 2007, a 28 percent increase in Q1 and a 30 percent increase in Q4 of 2006. Note these robust numbers coincide roughly with the Mac’s transition to Intel processors, which began in June 2006.

The switch to Intel is among several factors that have boosted the Mac’s sales numbers. Another is the so-called iPod “halo effect,” the notion that some Windows users who bought iPods liked them so much they replaced their PC with a Mac. Another is the overwhelmingly positive image Apple has cultivated as a hip, innovative company, and its increased visibility in recent years thanks to the iPod, its ever-growing chain of retail stores and its clever TV ads. Lastly, and perhaps most importantly, is the cumulative effect of PC users struggling for years with such Windows plagues as viruses and spyware. Many such people, fed up with their troublesome PCs, have begun looking to replace them with Macs.

According to Oppenheimer, half of those who bought Macs from the Apple retail stores in the June quarter were “new to the Mac,” a stat Apple trots out almost every quarter. There must be something to it; all these new Mac users are starting to show up in the Mac’s market share numbers. A month ago data from research firm NPD indicated that Apple’s share of computer sales in brick-and-mortar stores rose to 13 percent in May from 11.6 percent in April. Apple’s laptop sales have been particularly strong: while the overall market for laptops grew by 40 percent in May, NPD’s data showed Apple portables with growth of 65 percent.

Apple’s market share in the United States, which in 2004 was as low as 3.2 percent, rebounded to 5.6 percent according to data released by research firm IDC last week, putting Apple into a statistical tie for third place with Gateway. All the data I’ve seen points to continued growth for the Mac. For the first time in a very long time, the Mac Nation can think about a future where their platform once again has double-digit market share.

Part of the genius of Apple’s overall strategy is that each of its businesses helps nurture the others. The iTunes Store promotes the sale of iPods. The sale of iPods enhances the sale of Macs, as will the sale of iPhones. The retail stores provide an environment for people to check out all of Apple’s offerings without distraction from competitors’ products. Because the company’s products are designed to work seamlessly together, the more Apple stuff you have, the better the user experience. It’s all so devilishly clever. Meanwhile, Apple is dreaming up still more must-have gizmos to populate its digital ecosphere and jack up its bottom line.

It’s a great time to be a Mac user, isn’t it?

Posted by David Zeiler at 3:49 PM in Mac market share | Permalink | Comments (0)