Mac and iPod sales both down 16% in February

Posted by Christian Zibreg

Chicago (IL) - Apple
is apparently not outside the effects of the economic decline after all. The trend started last holiday season with a deceleration in Mac sales and has now spilled
over into January and, according to the latest stats, February as well. It's causing watchers to ponder a question of Apple: How low can you go?


It's not just Mac desktop sales that were free-falling last month,
but also iPods as well. Compared with a year ago period, both Mac and iPod
unit sales dropped in February by 16% each. Most analysts now
expect Apple to post between -4% and -11% growth in Mac and iPod unit sales
respectively for the March quarter -- based on last week's Mac desktops
hardware refreshes and iPod shuffle redesign. Compared with
the double-digit decline seen by some of its rivals, this is actually
considered a good performer in this weak economy. Still, both investors
and analysts are applying further pressure on the company to release a
Mac netbook to counter the notable drop in world-wide consumer spending.

Apple is
having a bad lack due to some remarkably accurate estimates of its computer
sales by the market research firm NPD Group. Their surveys
first warned us about decreasing Mac sales three months ago. And it's now
clear the combined effects of a depressed economy and Apple's
premium pricing strategy is taking some of the shine off the California-based
consumer electronics giant.

According to NPD's latest February report,
both Mac and iPod sales throughout the U.S. retail channel fell a
whopping 16% each -- compared with the same period a year
ago.

But despite the sharp February drop in Mac and iPod
sales, investors expect Apple to report a lesser decline of an average 4% decrease in Mac sales and 11% drop in iPod sales for the March quarter.
Converting these percentages into real-world numbers means an expected 2.197 million
Mac units and 9.5 million iPods in the first calendar quarter of this
year. To compare, Apple shipped 2.289 million Macs and 10.644 million iPods in last
year's March quarter.

Analysts are in line with the Street

Gene Munster, a
high-profile Mac analyst with Piper Jaffray, expects Apple to ship
anywhere between 2.0 and 2.2 million Macs in the quarter, resulting in
a 13% to 4% annual drop in sales for the giant. The analyst has also
projected iPod sales in the range of 9.0 and 10.0 million units,
which falls somewhat in line with the Street's 9.5 million units consensus.

Munster thinks the Cupertino-based Mac maker faces a difficult
economic environment that makes it hard to top strong shipments in the
year ago quarter (which were further boosted by the MacBook Air launch in February
of 2008). "We expect Mac NPD data to rebound in the month of March
due to the shipment of new iMacs, Mac minis, and Mac Pros in early
March,"
Munster told his clients.

The analyst also
noted that his 9.0 to 10.0 million iPods estimate equals to a 15% to 6% annual drop, in line with investors consensus of a
11% drop. "Given concerns regarding iPod weakness, we
believe the segment's in-line performance relative to Street
expectations is a positive,"
Munster wrote in a research note to
his clients. He expects that the unexpected refresh of the iPod shuffle
will drive improvement in the data by the end of the month.

Apple hurt by the lack of a Mac netbook

This
finding echoes NPD Group's milestone January report estimating a 6% annual drop in Mac sales through the U.S. retail channels -- the
first monthly decline in Mac sales seen in three years. NPD blamed January's
drop on the long overdue hardware refresh of Apple's consumer Mac desktops
that Apple updated just a week ago.

The research firm also predicted flat Mac sales
for the December quarter while Windows PCs
recorded a 7% growth. NPD analyst Stephen Barker told Reuters at the time that
"there is a little extra value to consumers to buy Apple notebooks," hinting that Apple's refusal to make a Mac netbook in times of depressed economy like this will backfire at the company.

Many analysts now warn Apple that it's high time
to produce a more affordable Mac. ChangeWave's February research of
consumer purchases of the past and future 90 days, clearly show that
netbooks have already pushed desktop computer sales into a downward spiral.
Moreover, netbooks now contribute to better than one in six of all
notebooks sold -- obviously hurting Apple which still lacks
an ultra-portable netbook-like Mac that would compete in the sub-$1000
price category where all the consumer money is pouring in these days.

Is it possible for Apple to respond to the market? Or are they simply a headstrong company dictating to the market that which they decide. I think these declining numbers coupled with external pressures for Apple to produce a lower-cost netbook-like device will reveal that answer very shortly.