Why Mac Desktop Sales Are on the Decline

It's almost a year-and-a-half since Apple last updated the Mac mini - and that update was long overdue when it finally arrived.

The Mac mini went Intel in January 2006 as the least powerful Intel-based Macs ever - the top-end model had a 1.66 GHz Core Duo CPU, and the dramatically underpowered 1.5 GHz entry-level Mac mini was the only Mac to ever use a Core Solo CPU.

Eight months later, Apple ditched the Core Solo. The Sept. 2006 revision had 1.66 GHz and 1.83 GHz Core Duo CPUs. That's right, it still used Core Duo processors when Apple had moving the rest of its line to Core 2 Duo. And it stuck with Core Duo for almost another year.

Apple finally brought the Mac mini into the Core 2 Duo (C2D) generation in August 2007. Earlier models are not able to take advantage of 64-bit mode, as that requires a C2D processor and a motherboard with 64-bit support.

Not only did Apple move to the more efficient, 64-bit friendly C2D CPU at that time, it boosted CPU speed as well - to a pedestrian 1.83 GHz and 2.0 GHz. Yes, a big improvement over the previous generation, but still a notch slower than the May 2007 MacBook, which ran at 2.0 GHz and 2.16 GHz.

Progress Everywhere Else

Since the Mac mini went Intel, the MacBook line has gone from GMA950 graphics to X3100 graphics to Nvidia GeForce 9400M graphics. The August 2007 Mac mini still has GMA950 graphics from 2006.

The entry-level iMac has gone from 1.83 GHz in January 2006 to 2.4 GHz in April 2008. It's gone from Radeon X1600 graphics to Radeon HD 2400 XT. And it's gone from 17" to 20".

Meanwhile, the Mac mini stagnates. The Mac Pro hasn't been updated in a year, and the iMac hasn't seen a change in nine months.

And Apple wonders why desktop sales were down significantly in the holiday quarter?

Macintosh Unit Sales, holiday quarter 2004 through holiday quarter 2008.

It's great to see Apple gaining market share. It's great to see Apple growing notebook sales. But it's pathetic what Apple's focus on notebooks and neglect of its desktop line has done to desktop sales - down 25% year-over-year.

Desktop Sales Analysis

Look at the data, and you'll see that Mac desktop sales peaked in the 2007 holiday quarter (Apple's first quarter of fiscal 2008). Why didn't Apple see sustained growth in the desktop segment?

Apple introduced new iMacs and Macs minis in August 2007, and sales were solid through the end of the year. No new consumer desktops in the first quarter of 2008 correlates with a drop in sales. The iMac was updated in April 2008, and sales did well for two more quarters.

Apple introduced no new desktops after April 2008, and sales declined six months later. This is the same pattern seen a nine months earlier, but this time the lull in desktop Mac sales occurred during the holiday quarter - the time you expect sales to go up.

Why didn't they go up? Because there was nothing compelling or new about the desktop line by the start of the holiday quarter - all the models ranged from six months old to over a year. And because Macworld Expo takes place in January, and the Mac savvy know that's when Apple is going to refresh at least part of its line. With the desktop line so dated, it was a no brainer that Apple would update them in January, which was just one more reason to postpone buying in the holiday quarter.

A third factor is the economy. We are in a recession, and it's impacting everyone. The American auto makers are in dire financial straits. Several banks had to be rescued. People are losing their jobs left and right, and some who have jobs are having hours and/or wages and benefits cut. Here in Michigan, with 10.6% unemployment, our unemployment system has been stretched beyond capacity. And at Low End Mac, site income has dropped to levels we haven't seen in four years.

People are spending less. We tightened our belts this past Christmas, and we suspect we're not alone. So with a tight economy (to put it charitably), an aging desktop line, and Macworld Expo in January, we have the three most important factors for declining desktop sales.

Yet at the same time, Apple has been updating its notebook line regularly, and sales growth is almost continuous since the Intel transition. New models are a motivation for people to buy; old models are not.

Surprisingly, Apple still hasn't updated the Mac mini, Mac Pro, or iMac as we approach the end of January. It seems like Apple is doing what it can to prove that desktops are no longer significant by letting them stagnate. That's known as a self-fulfilling prophecy.

Moving Forward

What Apple should be doing is growing its share of the desktop market by introducing refreshed models and new models on a regular basis. Were Apple to unleash new Mac mini and iMac models right now, it would have two quarters of solid sales. And were Apple to unveil a new model - perhaps the long awaited midrange Mac - sales would take off as desktop users with aging G4 and G5 Power Macs made the Macintel migration.

In a tight economy, people need a better reason to part with their money. New models, especially consumer desktops, will help there.

Or Apple can let them stagnate as longtime Mac users and potential switchers see no compelling reason to buy a new desktop Mac.