Numbers are important in business but don’t always tell the entire story of a company’s well being. Take marketshare. In every product, Apple owns a small market share– Mac, iPhone, iPad. Yet, in each market, Apple owns the more important profit share, topping all other manufacturers.
The iPhone heralded the arrival of a truly smartphone back in 2007. Apple sells more iPhones than ever, each with a profit margin that competitors would dearly love. Then CEO Steve Jobs announced the post-PC era with the arrival of the iPad in 2010. Indeed, since then, traditional PC sales have stalled, then fallen.
In the rapidly growing mobile device industry you would expect Apple’s iPad to continue to grow in numbers, while the Mac, more representative of traditional computing, would drop in numbers.
The opposite is true and it’s been that way for a number of quarters. Mac sales are going up, while iPad sales are going down.
The iPad may sell three times the number of Macs each quarter, but the average Mac probably sells for nearly three times as much as an average iPad, so the Mac’s profits remain very important to Apple, even when unit sales are substantially less than iPad or iPhone.
If traditional PC sales are shrinking, why are Mac sales increasing?
If tablet sales are growing, why are the iPad’s sales shrinking?
First of all, each product in Apple’s line– Mac, iPhone, iPad– is a premium product; higher price, larger gross margin, more profitability. With iOS 8 and OS X Yosemite, Apple is leveraging the high OS adoption rate of the former to help boost sales of the latter (Macs).
With newly updated products waiting in the wings I expect the Mac’s sales to remain robust. How so? Developing countries are not all about buying the cheapest PC, smartphone, or tablet. Secondly, those in the middle to upper class aspire to own better products than cheap plastic clones, which explains Apple’s rapid growth in China, despite the country being the hotbed of copycat technology products.
Remember, the iPod created a halo effect for the Mac, and helped launch the iPhone to tens of millions of customers who already loved Apple products. The iPhone’s success made it easy for customers to renew their love of Apple in the iPad, and both products continued the halo effect which helped increase Mac sales.
Now, as iOS 8 and OS X Yosemite become more integrated, and enterprise giant IBM takes Apple hardware along for the ride, the halo effect will extend itself to the entire product line, creating newer, larger numbers for Apple’s near term future.