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Analysis – Yesterday's refresh of Apple’s notebook family may feel like yet another hyped, but underwhelming Apple upgrade event. There are some who believe that Apple may be gambling away its Macbook empire and there are those who are convinced that Apple is not about Macs anymore. But then there are also those who think that the new Macbooks not only hold their technological lead in the notebook market but also expands the market potential for Mac notebooks. So, is the Macbook’s primetime gone or still ahead? And why should Apple care?
iPods and the iPhone may capture most of Apple headlines throughout the year, but the Macbook remains the single most important contributor to Apple's bottom line at this time. By any measure, we believe that Apple introduced solid upgrades for the notebook yesterday and if uniqueness attracts buyers, then Apple should have a good shot at extending its market share in this segment. As it is the case with all system vendors, Mac notebook sales are growing faster than desktops – more than half of all Macs sold are notebooks and Macs overall are growing six times faster than the industry average.
The numbers: Dollars and market share
Apple claims it owns 17.6% of the retail PC market in the U.S. Wall Street analysts estimate that Mac sales contribute 47% to an estimated $32.7 billion in Apple revenue this year, up from 40% of $19.3 billion in revenue in 2006. In other words, Macs may rake in $15.37 billion in revenue this year.
Whereas sales of Mac desktops and notebooks contributed 45% and 55% to total Mac sales in 2006, this year Mac notebooks are estimated to contribute a whopping 61%. This translates to 29% ($9.38 billion) of the firm’s estimated 2008 revenue, up from 22% in 2006. Apple has done a fantastic job positioning itself for the trend of growing notebook sales and a demand for much more stylish products. It is one of Apple’s fastest growing businesses that accounts for almost one of every three dollars the company receives.
Apple’s take in the U.S. notebook market: $1 on every $3 spent
Market data provided by NPD shows that one in five laptops sold in the U.S. retail during July and August carried an Apple logo. If we look at the total revenue, Apple's share of notebook market in the same period was 35%. In other words, Apple took in more than $1 on every $3 spent on a notebook in U.S. retail. Of course, this trend means that average selling prices of Apple notebooks are much higher than those of PC notebooks and allows Apple to rake in fat margins.
NPD believes that Mac notebook sales grew 30% in revenue and 35% by units year on year between July and August. In the same period, Windows notebooks fell 1.5% and 10%, respectively.
Mac sales are growing six times the industry average
Gartner estimates Mac U.S. market share at close to 10% in September, with an estimated 1.64 million Macs sold in the current quarter and unit shipment growth that exceeds the industry average by 6x. Net Applications' operating system web share usage trends suggest that Gartner may be right. For example, the September survey of 40,000 websites that represent overall Internet usage indicate that OS X hit a new record of 8.2% of the operating system web share, a gain of almost 0.4 points gain over the preceding month.
With that in mind, it is easy to see that notebook space is Apple's market to lose. Having said that, yesterday’s Macbook and MacBook Pro refresh is critical to Apple's fortunes and the Macbook position in the notebook segment. Some feel that the refresh is underwhelming just as the iPod event did last month. Yes, we expected upgraded hardware such as Montevina Core 2 Duo processors, more hard drive capacity and more memory. We also hoped for reduced price points, but a month ago no-one would have put their money on a high-tech manufacturing process, a redesign, a glass trackpad and an Nvidia chipset move.
Read on the next page: Can buyers resist?