You know...reading this headline, I'm not sure that I even know of any consumer-level PCs that cost over $1000 (obviously servers, CAD/3d Modeling workstations)...
I'm typing this from my acer aspire one right now and, honestly, this is more computer than I even need...
I will admit that I am a bit odd, the only thing I really use my computer for is an SSH/HTTP client; certainly my usage habits are different than somebody like my mother..
But then there's my mother...I bought her one of these a few months ago, and she LOVES it. Her desktop machine (which she uses for running quicken or something like that) took a shit a few weeks ago, and her motivation to have me fix it is about 0. Her aspire is more computer than she really needs (except for, maybe, the screen. The resolution leaves a bit to be desired).
So who IS buying computers that cost over a grand?
Well, there are gamers...people who are most certainly not going to buy buying a mac (despite a lot of games being available on OSX, it still isn't up to speed with windows). They might spend over $1000 (I am not a gamer, so I don't really know what is required for gaming these days. If it can run tuxracer and armagetron then I'm content). Buuut....most of the gamers that I know buy their computers from newegg and put them together themselves.
Even the desktops that I buy for my users at work only cost under $1k and that is with dell's "holy shit" service plan.
Apple, you're dominating the over >$1000 market because you're the only one IN it.
This claim would be akin to the coffee shop that I am sitting at claiming that they have 90% of the coffee market in Cross Lake, MN. They're the only coffee shop here.
This is not necessarily a good thing. Apple has largely $1000+ computers. Them taking 91% (and having single-digit overall market share) means that consumers increasingly prefer small portable cheap low-power computers (netbooks and similar), while the high-end market disappears.
As an analogy, it would be like Cray boasting 20 years ago that they owned 90% of the $10,000+ computer market.
Apple needs to innovate on the low end, or die.
On the other hand, it seems like computing for the masses will converge onto mobile devices, and Apple currently has the strongest offering in that market.
I don't know, this is like saying Mercedes needs to get into the sub-$40K market. Maybe they do, maybe not. I think Mercedes and Apple would rather own the top and have the market rise to them.
Or the whole market for things called "computers" is growing, and the high-end market is just growing slower than the rest of it.
This doesn't mean that the high-end market is doomed. It might just be growing at a slower rate.
You may ask: Why doesn't Apple then try to get into a business that is growing faster? The answer is: Sales growth is not the metric. Any business can boost sales by lowering their profit margin. (Old-school dotcoms used to grow like wildfire by giving the product away below cost and hoping to make it up in volume.) What matters is profit growth.
People have been saying for years that Apple needs to come out with lower end products or they'll die. Their steadily increasing profits (even through the recession) and massive cash reserves say otherwise.
Apple has always had the philosophy of selling at higher prices than others based on the 'quality' of their products - I'm not judging on this, just saying - it also gives them better margins. I remember there was a quote from Steve Jobs saying that they had a market share akin to BMPW (I might have that wrong) and that there was nothing wrong with being the BMW of the computer world.
I disagree. Netbooks are a fad that will not last over a few years. For one thing, the margins on netbooks are even slimmer than the cheapo laptops Dell was making before the "netbook revolution", and manufacturers are getting murdered left and right by this.
It's the Wal-Mart effect - you flood a market suddenly with cheap, shoddy product and people will jump for it, but it's not sustainable as your vendors and suppliers start dying off.
Profit margins are disappearing for the likes of Asus, Dell, and HP, and they're skating on thinner ice than ever before. Would you rather be selling $300 computers at a $5 profit each, or $1200 computers at a $100 profit each?
People got on Sony's back early on when they claimed that the introduction of a netbook will do nothing but start a "race to the bottom". They were attacked for being out of touch with reality and trying to peddle overpriced ultra-portable notebooks. But they were right.
Them taking 91% (and having single-digit overall market share) means that consumers increasingly prefer small portable cheap low-power computers
Their market share might be single-digit, but hasn't it been growing?
Another interpretation might be that consumers are simultaneously migrating towards Apple PC's and laptops as well as purchasing netbooks and similar for added convenience. That's the story in my household.
I am not sure that consumers prefer netbooks. I still don't know anyone owning one. I must admin I don't believe in netbooks market—one part will be taken by smartphones, another by proper notebooks.
Speaking of which: Apple's computers sales grew only by 4%, but notebook sales grew by 13%. Going into low-end, low-price and nonexistent margins market would be the sure way for Apple to die.
i agree with you that "Apple needs to innovate on the low end, or die" because cloud computing and browser OS are going to be a game changer - if every task is done on the net and if the browser is the OS then how would one differentiate a PC from MAC??? all you need is a hardware with a browser OS that is slick and speedy, while all the apps that resides on the net will have same look and feel on all the browsers doesn't matter what hardware you're using!
Great catch. I haven't read the article yet but it wasn't adding up. For-corporate-use Thinkpads and Dells are almost all in the $1001+ range, so I was confused.
One of the most fun parts of the Steve Jobs Reality Distortion Field is the statistics -- "91% of the > $1000 market", "most revenue during a non-holiday quarter", "most computers sold on sunny tuesday afternoons in spring", etc.
This stat is so cherry-picked it might as well have been "Apple claims 100% of the 'glowing-fruit-on-lid' PC sales."
I'm astounded at how recession-proof Apple has made itself seem. I was hoping they'd survive without too many bruises, but it seems as if the recession is boosting their sales, if anything.
They're a luxury good and a status symbol-- the people that were willing to pay a premium for one pre-recession by and large can still afford to. It's a triumph of their marketing direction (backed up by products of quality, so I hear).
It seems like what recessions do is get rid of the middle of the market. High end goods still do alright because their market is small to begin with and more able to handle the storm.
Apparently you missed the news last week the Apple dropped from 4th to 5th or 5th to 6th (can't remember exactly) in the top PC manufacturers in the world. The recession and the shift to cheaper PC's was cited as the cause.
Not necessarily a bad thing but it's definitely not a 'boost' in sales.
Buried a bit deeper is something more interesting:
Despite these advantages, US Mac retail sales slowed for about six months.
The Macolypse Hits Apple*
From about November 2008 to April 2009, Mac year-over-year US retail sales declined, even as Windows PCs dramatically gained. There was kind of a numbers reversal, following the late-September stock market crash. For example, in October 2008, following release of new aluminum, unibody laptops, US retail Mac revenue grew 25.5 percent, while Windows PC sales fell 4.2 percent, according to NPD. By January 2009, Mac retail revenue was down 10.4 percent from a year earlier and Windows PC revenue was flat.*
He goes on to say Mac Sales are up for June YOY, while attributing some of this success to price cuts, and noting that while Apple enjoys the high-margin territory firms which are pricing on value are holding onto market share.
I think the real losers here are not PCs in general or even manufacturers with a range of offerings like Dell and HP, but other luxury computer brands like Sony and boutique workstation suppliers.
As noted, the brick-and-mortar limitation is really distorting. Last time I was in Office Depot or Best Buy, they were strongly emphasizing value over performance with their space allocation.
I wouldn't say that Apple is the only one in the >$1000 market. However, they are the only one who is successful in that market. My last two laptops have been Macs (iBook and then Macbook). I didn't see them as high-end machines, although at $1300 each, they would have been "premium" by other standards.
The only other company whose laptops people rave about is Sony. I personally don't think that you should have to pay $2000 for a subnotebook, but if you intend to do that, Sony makes a very nice product.
Everyone else would love to get into this market, but can't. Dell, HP, Asus - they've all tried, but Apple's "low-end" products are better than their "high-end products."
Sure, I'm sure that Apple would like to get into the lower-end market, but they won't compromise quality to do that. The mac mini is the only low-end product they make, and it is also the only mac that doesn't have a convincing value proposition (funny how that works).
This is a staggering figure, but shouldn't be a surprise when you look at the PC laptop offerings. The way I see it, there are so many offerings under $1,000 that I can't see why you would pay more for a PC. $800 or so will get you a near top of the line system, and if you pay more than that you probably have a special application and as a result are paying a steep premium.
Apple has successfully positioned itself as a premium brand and that is great for them.
It's easy to break 1K if you factor in gaming or simply want a nicely-built machine. Case-in-point the Dell Inspiron line dominates under 1K, but if you want an XPS you gotta spend over the 1K mark.
The Inspirons compete with the XPSs as far as specs, but the quality and build of the XPS machines take them a notch above.
People who want to purchase Macs don't have a choice but to spend over $1,000. People who are willing to purchase PCs have that choice, and most elect to spend less. Is this stat really something to be proud of? It has more to do with the fact that Apple doesn't sell computers cheaper than $1,000 than anything.
[+] [-] blhack|16 years ago|reply
I'm typing this from my acer aspire one right now and, honestly, this is more computer than I even need...
I will admit that I am a bit odd, the only thing I really use my computer for is an SSH/HTTP client; certainly my usage habits are different than somebody like my mother..
But then there's my mother...I bought her one of these a few months ago, and she LOVES it. Her desktop machine (which she uses for running quicken or something like that) took a shit a few weeks ago, and her motivation to have me fix it is about 0. Her aspire is more computer than she really needs (except for, maybe, the screen. The resolution leaves a bit to be desired).
So who IS buying computers that cost over a grand?
Well, there are gamers...people who are most certainly not going to buy buying a mac (despite a lot of games being available on OSX, it still isn't up to speed with windows). They might spend over $1000 (I am not a gamer, so I don't really know what is required for gaming these days. If it can run tuxracer and armagetron then I'm content). Buuut....most of the gamers that I know buy their computers from newegg and put them together themselves.
Even the desktops that I buy for my users at work only cost under $1k and that is with dell's "holy shit" service plan.
Apple, you're dominating the over >$1000 market because you're the only one IN it.
This claim would be akin to the coffee shop that I am sitting at claiming that they have 90% of the coffee market in Cross Lake, MN. They're the only coffee shop here.
[+] [-] _pius|16 years ago|reply
That said, I think the statistic actually includes portables, not just desktop machines.
[+] [-] ljlolel|16 years ago|reply
As an analogy, it would be like Cray boasting 20 years ago that they owned 90% of the $10,000+ computer market.
Apple needs to innovate on the low end, or die.
On the other hand, it seems like computing for the masses will converge onto mobile devices, and Apple currently has the strongest offering in that market.
[+] [-] pchristensen|16 years ago|reply
[+] [-] mechanical_fish|16 years ago|reply
Or the whole market for things called "computers" is growing, and the high-end market is just growing slower than the rest of it.
This doesn't mean that the high-end market is doomed. It might just be growing at a slower rate.
You may ask: Why doesn't Apple then try to get into a business that is growing faster? The answer is: Sales growth is not the metric. Any business can boost sales by lowering their profit margin. (Old-school dotcoms used to grow like wildfire by giving the product away below cost and hoping to make it up in volume.) What matters is profit growth.
[+] [-] ptomato|16 years ago|reply
[+] [-] inovica|16 years ago|reply
[+] [-] potatolicious|16 years ago|reply
It's the Wal-Mart effect - you flood a market suddenly with cheap, shoddy product and people will jump for it, but it's not sustainable as your vendors and suppliers start dying off.
Profit margins are disappearing for the likes of Asus, Dell, and HP, and they're skating on thinner ice than ever before. Would you rather be selling $300 computers at a $5 profit each, or $1200 computers at a $100 profit each?
People got on Sony's back early on when they claimed that the introduction of a netbook will do nothing but start a "race to the bottom". They were attacked for being out of touch with reality and trying to peddle overpriced ultra-portable notebooks. But they were right.
[+] [-] briancooley|16 years ago|reply
Their market share might be single-digit, but hasn't it been growing?
Another interpretation might be that consumers are simultaneously migrating towards Apple PC's and laptops as well as purchasing netbooks and similar for added convenience. That's the story in my household.
[+] [-] rimantas|16 years ago|reply
[+] [-] adamc|16 years ago|reply
[+] [-] sahaj|16 years ago|reply
[+] [-] newacc|16 years ago|reply
[+] [-] arrrg|16 years ago|reply
[+] [-] trjordan|16 years ago|reply
This has a huge amount to do with this. Where else can you buy high-end PCs in a physical store, besides the Apple store?
[+] [-] iigs|16 years ago|reply
One of the most fun parts of the Steve Jobs Reality Distortion Field is the statistics -- "91% of the > $1000 market", "most revenue during a non-holiday quarter", "most computers sold on sunny tuesday afternoons in spring", etc.
This stat is so cherry-picked it might as well have been "Apple claims 100% of the 'glowing-fruit-on-lid' PC sales."
[+] [-] unknown|16 years ago|reply
[deleted]
[+] [-] zimbabwe|16 years ago|reply
[+] [-] tdoggette|16 years ago|reply
[+] [-] mikeryan|16 years ago|reply
More people then flock from the middle to the lower end. Looking at this page from dell: http://www.dell.com/home/laptops
A ton of laptops in the $400-600 range, 2 @ $1000, and then you hit their high end alienware stuff from $1200 and up
[+] [-] josefresco|16 years ago|reply
Not necessarily a bad thing but it's definitely not a 'boost' in sales.
[+] [-] anigbrowl|16 years ago|reply
Buried a bit deeper is something more interesting: Despite these advantages, US Mac retail sales slowed for about six months.
The Macolypse Hits Apple* From about November 2008 to April 2009, Mac year-over-year US retail sales declined, even as Windows PCs dramatically gained. There was kind of a numbers reversal, following the late-September stock market crash. For example, in October 2008, following release of new aluminum, unibody laptops, US retail Mac revenue grew 25.5 percent, while Windows PC sales fell 4.2 percent, according to NPD. By January 2009, Mac retail revenue was down 10.4 percent from a year earlier and Windows PC revenue was flat.*
He goes on to say Mac Sales are up for June YOY, while attributing some of this success to price cuts, and noting that while Apple enjoys the high-margin territory firms which are pricing on value are holding onto market share.
I think the real losers here are not PCs in general or even manufacturers with a range of offerings like Dell and HP, but other luxury computer brands like Sony and boutique workstation suppliers.
As noted, the brick-and-mortar limitation is really distorting. Last time I was in Office Depot or Best Buy, they were strongly emphasizing value over performance with their space allocation.
[+] [-] dlevine|16 years ago|reply
The only other company whose laptops people rave about is Sony. I personally don't think that you should have to pay $2000 for a subnotebook, but if you intend to do that, Sony makes a very nice product.
Everyone else would love to get into this market, but can't. Dell, HP, Asus - they've all tried, but Apple's "low-end" products are better than their "high-end products."
Sure, I'm sure that Apple would like to get into the lower-end market, but they won't compromise quality to do that. The mac mini is the only low-end product they make, and it is also the only mac that doesn't have a convincing value proposition (funny how that works).
[+] [-] JeremyChase|16 years ago|reply
Apple has successfully positioned itself as a premium brand and that is great for them.
[+] [-] josefresco|16 years ago|reply
The Inspirons compete with the XPSs as far as specs, but the quality and build of the XPS machines take them a notch above.
[+] [-] kpanghmc|16 years ago|reply