At its recent Worldwide Developers Conference (WWDC), Apple Inc. (NASDAQ:AAPL) unveiled a revamp of its operating system, along with a more affordable MacBook Air line. The MacBook Pro is just around the corner, the company said, leading some longtime Microsoft Corporation (NASDAQ:MSFT) loyalists to consider making the switch.
Macs, at one time considered devices of graphic designers and video editors, have snagged a larger-than-ever share of the PC market in recent years. Although the company only ships 5% of all units shipped in the PC market, the company somehow manages to bring in 45% of all profits in the sector.
Apple’s profit increasing
When he announced second-quarter earnings in April, Apple Inc. (NASDAQ:AAPL) CEO Tim Cook hinted at exciting new products for fall. Revenue for the second quarter was up $4.4 billion from the same quarter last year, thanks to the iPhone 5 and the new iPad. Despite holding such a large part of the PC sector, however, Mac sales fell from 4.02 million last year to 3.95 million.
PC sales, overall, were down 14%, with analysts blaming the lackluster response to Microsoft Corporation (NASDAQ:MSFT)’s Windows 8 for the drop. The top PC vendor, Hewlett-Packard Company (NYSE:HPQ), saw worldwide shipments of its computers fall 23% in the first quarter of 2012, according to research firm IDC. IDC’s vice president said not only did Windows 8 fail to jump-start the lagging PC market, it seems to have actually contributed to its decline.
Microsoft Corporation (NASDAQ:MSFT), meanwhile, isn’t going down without a fight. At the recent Electronic Entertainment Expo (E3), the company previewed the upcoming Xbox One, but Xbox consoles and games account for only 13% of the company’s revenue. Analysts are blaming the company’s late entry into the tablet and smartphone market for its continued poor performance.
Microsoft Corporation (NASDAQ:MSFT)’s third-quarter earnings exceeded expectations, rising to $6 billion, up from only $5.1 billion a year ago. The company stressed an emphasis on its Cloud products and furthered that with a recent ad that showed how Microsoft products shape every area of our lives, from Skype to Office 365 to Internet Explorer and Xbox. But as Microsoft shifts its emphasis to mobile devices and Cloud offerings, where does that leave the PC manufacturers who run its operating system?
HP needs change
Hewlett-Packard Company (NYSE:HPQ), the top hardware manufacturer running Windows systems, saw its net income fall 32% in its second quarter. The company’s signature products — computers and printers — are suffering the effects of changing technology, and servers, its other mainstay, are feeling the impact of customers increasingly choosing cloud providers.
Instead of aggressively tackling the iPad or the Windows Tablet, Hewlett-Packard Company (NYSE:HPQ) is instead focusing on the growing demand for cloud connectivity, providing services for businesses of all sizes. Of course, HP and Microsoft Corporation (NASDAQ:MSFT) both know that as long as offices exist, there will always be a need for PCs and laptops. Not every worker today is traveling from meeting to meeting, iPad in hand.