Apple Inc. (NASDAQ: AAPL) has been dominating the PC market ever since its MacBook appeared. That was 7 and a half years ago and since then, Apple’s market share has grown by an astonishing 150%, simply blazing through the competition and for the most part landing on its feet. By now, pretty much everyone knows their secret to success: sleek designs with technological innovation, and a systematic distinction from the PC crowd. But the Mac sales which once considerably outgrew the industry, have been slowly climbing back down the success stairs and are almost touching the ground.
So, what is happening with Mac sales and more importantly, does Apple’s CEO Tim Cook even care?
When you’re up, you can always come down
Part of Apple Inc. (NASDAQ:AAPL)’s confidence as a tech company comes from its constant and steady sales, which in barely 8 years accomplished a 272% revenue increase. Now, this doesn’t mean that Apple is untouchable market-wise. Indeed, I’m sure most of you will remember the 22% drop in sales back in 2011 when our tech favourite failed to deliver enough of the newest iMacs to meet our demand. Well, Apple sure felt the heat, but it didn’t even sweat. Because by 2011 we already had the options of acquiring iPads, in order to substitute our immediate Mac needs.
Halos never fade
Now to get some perspective, let’s see how Apple Inc. (NASDAQ:AAPL) is looking on the market. The Mac sales have generated $21.5 billion in income, which represents 13% of all Apple sales. Also, Mac cashes out big in the overall PC market, where Apple’s profits take nearly half the cake. However, the bigger issue is the 20% drop in Mac sales that the tech giant has been exposed to. According to Charlie Wolf of Needham & Co, this is due to the fading halo effect. This means that Apple Inc. (NASDAQ: AAPL) once benefited from Windows users, who discovered the Apple Store through the iPod, iPhone or iPad, but now the thrill is now gone. The iPad dominance is probably causing customers to come into the shop wanting a Mac, and leaving with a new iPad air instead.
Prices lead the market
So, if iPad sales are replacing Mac sales, instead of impacting PC sales, wouldn’t that just leave Apple Inc. (NASDAQ: AAPL) more room to play on the phone and tablet market? Maybe, but then sales will still be a question of price. While Mac’s are cheaper today than ever, they’ve become much pricier than average PC’s. And this would affect the overall revenue, if it weren’t for Apple’s intangible asset: its brand name. So even if prices keep rising, like with the iPhone 6, Apple fans are bound to still buy the products because of what they represent.