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Stop the Noiz

The Mac's 'Troubling Low' Market Share

Frank Fox - 2008.04.29 - Tip Jar

Popularity: LEMLEMLEMLEM

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for those who don't know him, Paul Thurrott is a sycophant for Microsoft. He likes to find any excuse to sling mud at Apple for the delight of his fans (and of course for the pleasure of MS.) Recently on his website, he was displaying the market share numbers for computer sales. This, of course, shows that Macs are only a small part of overall PC sales, and that is supposed to put us in our place. Mac sales are growing, but the remain only a fraction of the market.

To the best of my knowledge, Paul is correct about Apple's market share. But if this is true, why has Apple stock price gone up 2000%?

No, that's not a typo. Hewlett Packard and Dell sell five-to-six times as many computers, yet their stock price is so-so. Are all Wall Street investors just a bunch of mindless Mac loving zombies? What does Apple have that HP and Dell lack?

Do you see that little dip that happened at the end of 2007? That's when the recession news hit hard and investors started selling off. The Mac hating websites used that dip as an excuse to start beating up Apple for not being successful enough.

That was a bad time for short-term investors, but in the grand scheme it was nothing more than a blip.

Apple vs. HPApple vs. Dell

Thurrott is so nice that he has been displaying Apple's low market share for the years 2007, 2006, 2005, and 2004. Let's pull those numbers together and see how they compare to the stock market trend.

            2004    2005    2006    2007
Mac Sold    3.22    4.74    5.66    7.76
Increase           32.0%   16.1%   27.2%
PC Sold   174.00  208.00  234.00  270.00
Increase           16.3%   11.1%   13.3%

From 2004-2007, worldwide PC sales increased 155% - not bad for an industry. Macs increased 237%, which is 82% more growth. I would have to say that the growth of Mac sales is incredible. Most companies that have high growth suffer a lot of growing pains and generally screw something up.

Truthfully, the growth in Mac sales has been overshadowed by sales of iPods, iTunes, and now iPhones. Apple managed 237% growth on Macs while at the same time dominating a couple of other markets without any big problems. That is what investors like - fast growth, and especially the potential for much more. Every year that Apple has managed 30% or more growth, their stock price did the best.

How will Mac sales look if 30% growth can be maintained? for comparison we'll be optimistic and assume that PCs continue at 15% growth.

            2004    2005    2006    2007    2008    2009    2010    2011    2012
Mac Sold    3.22    4.74    5.66    7.76   10.09   13.12   17.06   22.17   28.83
Increase           32.0%   16.1%   27.2%   30.0%   30.0%   30.0%   30.0%   30.0%
PC Sold    174.00 208.00  234.00  270.00  310.50  357.08  410.64  472.23  543.07
Increase           16.3%   11.1%   13.3%   15.0%   15.0%   15.0%   15.0%   15.0%
Mac/PC       1.9%   2.3%    2.4%    2.9%    3.3%    3.7%    4.2%    4.7%    5.3%

It looks like we'll have Thurrott's message of small market share for years to come. Even as Mac sales doubles every three years, there are still going to be a ton more PCs sold. Neither Vista nor XP are going away any time soon, and Microsoft will be making billions of dollars from all those suckers who buy PC crap.

Still, there's no reason to despair on the Mac side. A company growing at 30% each year will not be going out of business as long as they keep tight controls on costs. Lucky for us and investors, Steve Jobs is a skinflint. He's hired some very capable people to make this happen. Investors, who as a group don't care about Macs vs. PCs, find plenty of news to be positive about Apple.

As Thurrott could see if he bothered to look at his own numbers, growth in Macs is a lot more interesting than for PCs.

So, Mr. Thurrott, I hope you enjoy XP and Vista, because you and the rest of the PC world are going to be stuck with them for the next 2-3 years at least. You can bet that Apple will have many new things for Microsoft to copy as Leopard matures and Apple readies for the next cat. Apple is proving to be the more agile company with many new products fueling growth.

The billion dollar question isn't if Macs are going to grow at 30%, it is the possibility for even high growth rates as Vista continues to get bad reviews and users start looking for an alternative.

Disclaimer: This individual does own Apple stock as well as Apple computers. LEM

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