Apple now has 9% US market share, volume growing at 6x the industry average | Hacker News Reader

Apple now has 9% US market share, volume growing at 6x the industry average

apple20.blogs.fortune.cnn.com

22 pointsechair34 comments

It’s almost as if Apple were in a different business than Dell (DELL), HP (HPQ), Acer and Toshiba.

Helloooooo! DELL, HP, Acer and Toshiba are in the ruthless business of trying to cut their margins thinner and thinner with fewer and fewer opportunities to differentiate their products while they acts as collectors for the Windows Tax.

Apple is indeed in a different business, a business based on differentiation and branding.

> Helloooooo! DELL, HP, Acer and Toshiba are in the ruthless business of trying to cut their margins thinner and thinner with fewer and fewer opportunities to differentiate their products while they acts as collectors for the Windows Tax.

Umm, no. They're in the biz of trying to increase their margins. Differentiation is one way that they try to do it.

Customers are in the biz of trying to decrease said companies' prices. One way to cut prices is for said companies to cut their margins.

Currently customers are winning.

Never confuse the outcome of an interaction with the intent of one of the parties.

Well, DELL has made much of using supply-chain optimization to make more money on lower net margins. If HP, Acer, and Toshiba are working to differentiate their products from each other, I think they need to work harder.

And I speak as someone whose last PC was a Toshiba.

That would be different companies. With different strategies.

based on differentiation and branding

Heh. You obviously don't go to the dell website very often. They spend an inordinate amount of time trying to brand and differentiate various product configurations. It can be literally 5, 6, 7 sets of pages before you get to the "buy now" button.

Of course, it's all just CPU type + Memory Size + Hard Drive Size + Windows variant in the end, but they really, really try.

HP is the odd one out.

HP sees the future in services, just like IBM. They're fattening (ie: media-ing) up their consumer products to sell off their entire PC line in the next 3 or 4 years.

I'd say they're the ones that realize there's now future tilling Microsoft's fields.

I wonder how high this could go? I think Microsoft are vulnerable here, since they are widely disliked, even hated.

Apple's market share in the US is higher than in the rest of the world, because the US market is less price sensitive. But what if Apple brought out a cheap version of the Mac Mini, to capture that sector of the market? It ought to cost no more than $200 and like the existing Mac Mini it would have BYODKM ("Bring your own Display Keyboard and Mouse") -- but it would also be able to use the old PS/2 keyboards and mice, which many people have in their attics or on an old PC. This would make it a very attractive low cost option.

Apple could have as an option on all their computers dual-boot with Linux (maybe using a customised Ubuntu distro), and allow people to run Linux programs in a virtual machine under Mac OS. The number of extra customers this would bring directly is not large, maybe 1% of the total market for new PCs; however it's an influential market sector because most Linux users have less-technical friends who rely on them for advice.

One of the drawbacks of running Linux is that it's less likely to be compatible with new hardware than a more mainstream OS. However if the Apple distro and campatibility layer was well-written it would allow and hardware that works with Mac OS to work with Apple's Linux. So many Linux users might go for this option.

If Apple did this, I think they could get 20%+ market share in the US by 2009Q4. How could Microsoft respond? Reducing prices probably wouldn't help them much, and Microsoft are too bloated and slow moving to actually produce a good operating system.

Of course, the problem with this strategy is that Apple may be cannabalising their existing market to some extent.

I think they could minimise this effect, firstly because the cheaper computers would be a lower spec, and secondly (don't laugh) they could make the cheap ones look not as pretty -- a factor that's probably important for a significant proportion of Mac users. Maybe the ugly cheapo computers could be sold under a different name to preserve the quality of the Apple brand.

Apple will NEVER ship a third-party Linux. If they do use the Linux kernel (and it's not clear to me what advantages that would have, esp. given the disaster that is Linux audio) the user experience will be indistinguishable from OSX.

> Apple will NEVER ship a third-party Linux.

I agree. I don't think that they will either. My argument was not that they will, but that it would be in their interests if they did.

Apple often behaves like this, e.g. the original Mac didn't have an expansion slot, even though it would've been in Apple's interests to include one.

Apple's strategy from day 1 can be summarized in two words: just works. Given the choice between something that just works but doesn't suit the needs of all users, and something that only a minority will use that opens the risk of something not working, they will always choose the safe option. Which is fine, everyone knows upfront what they're getting.

Apple won't stop you running Linux in VirtualBox say, but they won't take responsibility for it at al.

So...you are suggesting Apple sell a computer for less than the average profit margin on their current line of computers (or about there, I'm guessing).

And this will help them how, exactly? What's the break even point for them to get to their current level of profit? Do you even know if it is possible to make a profit at all selling a $200 computer capable of running OS X? What kind of hardware are we talking about here?

A just as likely scenario from selling $200 computers is Apple going out of business, I would think.

Apple's strategy is basically to skim off all of the best customers from their competitors and make lots of profits by doing so. Meanwhile, the rest of the industry need to walk a tight rope between small enough margins to sell a larger volume than their competitors, but not so small as to be negative.

Judging by the profit growth Apple has seen in recent years compared to their competitors, I think it's working pretty well for them.

There's certainly an element of truth in what you say.

I think most of the customers for the $200 computer would be new customers, not existing Apple customers. And over time, after having used a Mac they might buy another more expensive one later on. (Particularly if their experiences with Mac OS were better than witrh Windows).

They already sell a small, just a bit over $200, portable, small display OS X computer: it's called an iPod Touch.

You can't edit a modern document on an iPod touch. Nor can you use it for long periods.

9% market share in US only. The edited title here in HN can be misleading.

What may get lost is that Apple sold 33% the number of computers that Dell did in the same time frame. As Dell is a big corporate supplier, it is possible that Apple sold as many (or almost as many) personal machines as Dell, and more than any other manufacturer. Another interesting insight is that corporations install the same software they've already purchased and will continue to do so during a recession, while personal users are able to buy and install software as they see fit--especially those first-time users who are trying to find replacements for their favorite windows software. So, buyers choose Macs when they have a choice, but choose Dell and HP machines for their companies to run all of their existing software.

it is possible that Apple sold as many (or almost as many) personal machines as Dell, and more than any other manufacturer

Indeed. This article

http://money.cnn.com/2008/10/14/technology/moritz_apple_anno...

says they now have 17.6% retail market share.

And their stock is close to their 52 week low with a P/E under 20. Interesting.

1) The rest of the market is also at its 52 week low, no? 2) In a recession, upmarket stuff and luxury items tend to slow down more, so it could affect Apple more than some other PC makers.

It's not quite that simple. Often the richest consumers are not hit as hard by recessions and keep spending. And even if they are hit with a glancing blow perhaps instead of buying another house, car, boat they might seek comfort in more modest luxury purchases.

I saw this first-hand during the post-bubble recession when I was an engineer at a luxury consumer electronics company-- we made lots of money while much of the industry was hemorrhaging.

Supposedly sales of Patek Philippe watches actually peak during recessions. [1]

[1] http://www.brandchannel.com/features_effect.asp?pf_id=104

And that's why I bought Apple today!

I wonder what their US market share in computers priced over $1000?

Let's see how long this will hold up since now we are in a recession and Apple's stubbornness in regards to high pricing of their laptops.

Apple won't grow any bigger until Steve Jobs leave.

Interesting, why do you say that?

I'm referring to the company size -- which has some direct influence in how big of a market share Apple can have. My pet theory is that Apple is only as big as Steve Jobs can handle from a management standpoint.

The company is pretty constrained in terms of growth. Engineering team are making do with taking more projects while undermanned and understaffed. There's also a hiring freeze that's been thawing since last year. Also, half of the company size are retail workers.

This doesn't mean that market growth isn't important to Apple/Jobs, but from what I gathered it's not his primary concern or motivation.

Interesting take. I wonder if this is isomorphic to programming team size. If we get rebuild the management culture around spreadsheets and process so we are not dependent upon the key manager, we can scale revenue out. But do we end up with mediocre products and wind up with another me-too consumer electronics company?

Very interesting conundrum if you're on the board...

The dogma on campus was always to maximize what you have instead of adding more to the mix. Some teams are pretty resistant to hiring as it's a sense of pride to be working 80 hour weeks. So in that way, Apple runs very lean. In fact when Jobs came back one of the first decisions he made was to axe the research division in the company not because the company was weak (it had a good chunk of cash reserves) but because it was the easiest and fastest way -- from the management point of view -- for him to get products out. The mentality of the company switched completely and I believe it's partially from that early decision to act as a small company.

> Apple won't grow any bigger until Steve Jobs leave.

All of them?

I'm not sure what kind of stupidity you're trying to point out. Leaves? Grammar? Oh boo hoo.

It's a joke, take it easy man...

Sarcasm doesn't transfer :/

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