Netbooks Take a Toll on Apple

It was a rough holiday season for computer makers not named Acer. Industry-watching specialist Gartner is out with its preliminary PC shipment tallies, and they aren't pretty.

Stateside computer shipments fell by a whopping 10.1% to 15.6 million during the fourth quarter, according to Gartner. Market leader Dell (Nasdaq: DELL  ) led the slide, with a steep 16.4% reduction in shipments during the quarter.

Company

Q4 2008
Market Share

Q4 2007
Market Share

Year-over-Year
Shipment Growth

Dell

28.6%

30.8%

(16.4%)

HP

27.5%

25.6%

(3.4%)

Acer

15.2%

8.8%

55.4%

Apple

8%

6.7%

8.3%

Toshiba

6.5%

5.2%

12%

Others

14.2%

23%

(44.4%)

Source: Gartner.

Hewlett-Packard (NYSE: HPQ  ) closed the gap with Dell, setting the stage for an interesting battle for the gold in 2009. Apple (Nasdaq: AAPL  ) appears to be holding well, growing within a shrinking market, but hold the applause.

Three months ago, Apple was the speedster. It was the third-largest player in stateside shipments with 9.5% of the market. Acer missed out on the bronze back then, given its 8.9% slice. Apple's shipments were growing at a torrid pace of nearly 30% over the previous year's showing. Momentum has clearly shifted in favor of Acer's netbook stronghold.

Naturally it's worth pointing out that Apple's premium Macs and MacBooks sell for substantially more than Acer's devices. It's not fair to lean on a unit shipment table as gospel, when Apple would likely blow Acer away in terms of raw value of these computers. However, can Apple afford to stay out of the netbook market if the trend continues?

Apple bulls would argue that it would be counterproductive to throw its hat into a cannibalistic ring that would eat into its margins, validate a niche industry, and come at the expense of its higher-end machines.

I don't entirely agree. If Apple netbooks catch those who were angling for an Acer Aspire -- and not a pricier entry-level MacBook -- it can be incremental.

Now that even RadioShack (NYSE: RSH  ) is selling a connectivity subscription-tethered Acer netbook for $99.99 and Amazon.com's (Nasdaq: AMZN  ) best-seller list is flooded with netbooks, Apple can't ignore what the market is clamoring for.

A few years ago, when you had to squint your eyes to see the market share sliver that Apple was commanding, it could afford to thumb its nose at the masses. It's different now; Apple stores dot suburban shopping malls. It has to respond, or retreat back to its niche nook. Now that everyone wants to "think different," Apple has no choice but to be the same.

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Longtime Fool contributor Rick Munarriz settled for a Dell laptop instead of a MacBook three months ago, based partly on price. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (6)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 15, 2009, at 11:17 PM, cautiouswillie wrote:

    Has it ever occurred to anyone that one of the main reasons for poor PC sales is Vista? Our company has put a total freeze on any new PC purchases as long as MSFT insists on foisting Vista on us. So we're buying used computers and upgrading the innards. A little extreme, I think, but it makes me suspect there are others out there with the same motto: Hasta la Vista!

  • Report this Comment On January 16, 2009, at 10:29 AM, TMFBreakerRick wrote:

    Willie, you may have something there -- especially since XP (or Linux) is the OS of choice on netbooks.

  • Report this Comment On January 16, 2009, at 1:08 PM, Vulpinemac wrote:

    I'm intrigued why you would say that Apple was being hurt by the netbook phenomena, since the charts you reference shows that the average growth rate in the computer industry was seriously in the negative (-44.4%) and only Acer and Toshiba had higher growth numbers ( 55.4% and 12% respectively.)

    I would think that you would take Acer's aquisition of Gateway last year into consideration and add Gateway's 2007 figures to Acer's. This would probably result in a net loss for Acer/Gateway year over year instead of a gain.

    This leaves only Toshiba as demonstrating higher growth figures YoY compared to Apple. This also implies that, while netbooks are popular, they are neither a big profit item nor do they seem to be as big a market in themselves as certain analysts would have you believe. I see today's netbooks as roughly equivalent to the TI99 of the early 80's in both popularity and longevity.

    Yes, obviously there is a market for a full-powered pocketable computer. I just don't think the current iterations of the netbook properly fill that market; there's just nothing better available at the moment.

  • Report this Comment On January 18, 2009, at 10:52 PM, daveshouston wrote:

    What a completely ridiculous article.

    Why don't you transplant the same silly logic into additional articles as noted here:

    "Schwinn takes a bite out of BMW"

    "Greyhound takes a bite out of United Airlines", and

    "Burger King takes a bite out of Ruth's Chris"

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