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Apple reported its third fiscal quarter earnings for its FY2013 today, and the Mac sales numbers aren’t great: Year over year the number of Macs sold dropped 7 percent, from 4.02 million to 3.75 million. What’s this mean for Apple and for the future of the Mac?
For the moment, probably very little. Because any way you slice it, the Mac is responsible for only a small portion of Apple’s overall revenue. For the quarter, Apple reported $35.3 billion in revenue. Of that, less than $5 billion was from the sale of Macs – less than 15 percent. The Mac, once Apple’s dominant business, truly is a sideline interest compared to the iOS juggernaut.
The seven percent drop is further off than market research firm NPD had expected – they’d predicted a more modest five percent drop in Mac sales. What’s causing the slowdown? It’s certainly reflective of weakening PC demand all together: Gartner reported a 10.9 percent contraction for the second calendar quarter of 2013 (the same time period Apple’s Q3 happens in). IDC saw the steepest drop ever in the same calendar quarter: in April, IDC reported a 13.9 percent decline in PC revenue.
So by those measures, Apple is still doing better than the rest of the industry. But that doesn’t mean Apple shouldn’t be concerned about this downward trend. As you can see from the chart above, Apple’s Mac sales are the worst they’ve been in a while.
Blame it on the iPad
Apple isn’t immune to the market reality that more PC manufacturers are facing every day: fewer people are buying computers, including Macs because more are turning to tablets like the iPad. The phenomenon is known as “cannibalization.”
And from Tim Cook’s perspective, cannibalization represents “a huge opportunity” for Apple. At least, that’s what he’s gone on the record as saying. He believes the iPad gives Apple “the mother of all opportunities” to wrest people’s hearts and minds away from Windows-based PCs and into the iPad. That, he says, will lead people eventually to buying a Mac to replace an aging PC.
But more than that, Cook isn’t concerned about cannibalization of Apple’s existing Mac user base. He’s said previously that some Apple customers may be choosing the iPad over the Mac, but a lot more are choosing an iPad over a Windows PC. And Cook feels that’s one in the win column for Apple.
Don’t blame it on the MacBook Air
In mid-June, Apple announced and immediately began shipping a refreshed MacBook Air. It’s the first Mac in Apple’s product line to use Intel’s fourth-generation Core “Haswell” microprocessor, which provides much better battery life and distinctly better graphics performance than what Apple used before.
And it turns out that the new MacBook Air has been enormously successful: people are buying it in droves. Outside of Apple retail stores and a few big box retailers with the clout to push Apple’s inventory their own way, many of Apple’s retail channel partners have had trouble getting as many of the refreshed laptops as they can sell, either directly from Apple or through Apple’s network of distributors.
Apple exited the June quarter with a lot of customer demand for the updated MacBook Air. And remember, Apple only released the refreshed MacBook Air in mid-June: its sales only contributed to about three weeks’ worth of revenue for Apple’s entire quarter.
What can Apple do to turn it around?
I’m not sure that Apple can do anything to turn it around. I’m not sure they need to. Wall Street analysts don’t really pay that much attention to the Mac sales numbers anyway. But the Mac is and always will be Apple’s spiritual home – it’s the technology that iOS was born from, and Apple continues to refine the Mac operating system and the hardware that runs it. What’s more, they continue to innovate. Look no further than the forthcoming Mac Pro as an example of that.
So even if Mac sales remain tepid, as I expect they will, there’s no reason to be glum. We just have to acknowledge and respect that iOS is the king of the hill these days. As long as Apple can make money producing Macs – and they certainly are – they’ll keep making them.
Steve Jobs’ vision of a truly “Post PC world” is still a way off. Though if this trend continues, the end of the PC may be coming sooner than many of us expected.
