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Needham: Macs outpaced PC industry in Q4 2013 by 25 percent

updated 09:38 pm EST, Fri February 21, 2014

Best result for Mac growth in holiday quarter in five years, says analyst

Though Apple surprised analysts in fiscal Q4 2012 with an unexpected drop in Mac sales, overall the company has been outpacing the global downturn in PC (desktop and notebook) for at least the past five years. Though demand bounced back to expected levels during the holiday season in 2013, exactly how well Apple did compared to its rivals in the traditional PC space was not precisely known. It has now been revealed that Apple outpaced the industry in Q4 by 25 percent, its best showing in five years.

Analyst Charlie Wolf with Needham & Company, in revealing the news to investors in a new memo, wondered if the strong performance was just a seasonal "blip," however, given that the overall PC industry is in decline (which also affects Apple). Still, Mac shipments grew 18.1 percent in the December quarter over the same period a year earlier, outpacing the overall PC industry by 24.7 percent. With one quarter's exception, the Mac has gained market share against Windows PCs in every quarter since 2005.

Part of Apple's success over the 2013 holidays is due to its failure to supply sufficient new iMac units during the holidays in 2012, a rare inventory misstep that saw constrained supply even into 2013. This time around, Apple refreshed its MacBook line in October and had plenty of iMacs on hand, as well as having introduced the new Mac Pro (though the latter was unlikely to have played any significant role in holiday sales, as it was severely constrained).

"The question we don't have an answer to is whether Mac shipment growth can overcome the headwinds of negative growth in PC shipments," Wolf told his clients in his memo. "While the Mac represents a small fraction of Apple's revenues, it nonetheless is an important barometer of the health of Apple's ecosystem."

The Mac has gained share in the worldwide marketplace, but at a very modest pace -- going from 2.1 percent in 2005 to 5.5 percent in 2013. While each percentage point represents at least 10 million additional Mac sales per year, Apple's Mac business remains only a fraction of its revenues today, dwarfed by the iPhone and iPad -- the latter of which Cook has admitted cuts into its Mac business, as it does the core of its PC rivals, reports AppleInsider.

Overall PC shipments have been dropping for over seven quarters, but Wolf thinks that the iPad's success as an at least partial replacement for the traditional PC may be hurting Mac sales more than Windows sales, since Apple customers are even more likely to buy an iPad than other platform users. "Shoppers at the Apple Stores most likely consider both a MacBook and an iPad for their next purchase," he said. "The allure of an iPad is undoubtedly far greater when it is in close proximity to a MacBook than it is in other shopping venues."

In an earlier note, Wolf noted that while PC sales declines hurt PC manufacturers because of their notoriously razor-thin margins that rely on quantity sales, the average selling price for the Mac -- $1,300 -- hasn't budged in years. This is a key factor in traditional PC success as measured by revenue share -- Apple has grown from 3.2 percent nine years ago to 10.4 percent share when measured by revenue. As it has done with its iPhone and iPad, Apple has kept its Mac line relevant by remaining highly profitable rather than going for the most popular position with virtually no profit, as (for example) all Android makers other than Samsung have done.

by MacNN Staff



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