Apple Is Killing It -- Here's Why

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Nearly five years since stripping "Computer" from its corporate name, Apple (Nasdaq: AAPL  ) is enjoying new highs in PC market share.

According to GigaOM, new research from Needham & Co. finds that, in September, Apple accounted for 5.2% of the worldwide personal-computer market. Mac sales also grew 24.6%, more than four times as fast as the market average.

The last time Apple held so much sway on the PC market was 15 years ago, in the wake of Microsoft's (Nasdaq: MSFT  ) release of Windows 95.

To be fair, Apple still lags PC peers Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) . Asian rivals, too. But the worldwide appeal of the iBrands is undeniable. Between 2005 and 2010, Apple's profit from Asia-Pacific sales soared nearly 3,000%.

Consumer enthusiasm is no doubt fueling Apple's gains here and abroad. But corporations are also playing a role, Needham says. Mac business sales zoomed 43.8%, versus 4.8% for the overall market. Sales to "very large businesses" improved even more -- up 56.7%, impressive when you consider that large enterprises have long been a stronghold for Windows PCs.

Can the trend hold? Why not? We've seen similar data here in the U.S., while informal studies have identified an increasing number of us who identify ourselves as "Mac people." Now we know why. Those mindshare gains have materialized as market-share gains.

Somewhere, Steve Jobs is smiling. Investors should be, too.

Are you a Mac or a PC? Would you buy shares of Apple today? Please let us know using the comments box below. You can also add Apple to your watchlist for instant updates when Mac, iPhone, and iPad news breaks.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, and Dell and creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (19) | Recommend This Article (18)

Comments from our Foolish Readers

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 November 21, 2011, at 6:40 PM, Oldfool103 wrote:

    I'm a Mac.

  • Report this Comment On November 21, 2011, at 7:16 PM, demodave wrote:

    I, too, am a Mac and a long AAPL investor. I wouldn't likely buy now to add to my long-term position, because AAPL is over-represented in my portfolio, but at this low P/E ratio, I could see buying to maintain share count and adjust taxable basis via donations in the form of AAPL stock.

  • Report this Comment On November 21, 2011, at 7:49 PM, H3D wrote:

    I'm 3 Macs and several PCs. But the PCs are all virtual ones running on the Macs.

    Being able to snapshot a PC and then roll it back as required, completely and reliably, is the biggest step forward in the PC world in the last 25 years. It makes them almost usable.

  • Report this Comment On November 21, 2011, at 7:58 PM, sabourins wrote:

    I'm a PC. It's all I've ever known. Would like to see a Mac in operation for comparison purposes. I've been long on AAPL for a few years now.(bought at $66.00). Would not purchase more as I currently have a heavy weighting; unless it ever gets down to $300.00.

  • Report this Comment On November 21, 2011, at 8:41 PM, foxxx333 wrote:

    I'm an iMac, a MacBook, (2) iPhones and a MacBookPro, all personal. Retired, having used Macs in my business. Long 6490 AAPL and short 14 Jan. '12 Puts at 400 (sold for premium of $113.70). Apple represents more than 40% of my portfolio. I expect earnings to beat analysts' and Apple's guidance for Q1 of 2012 (present quarter). iPhone sales are surging and iPads will drive heightened interest in Macs as platform for the enterprise. Apple's OSX represents the world's largest installed base of UNIX OSs and is the single most stable OS in use for desktops. Apple's purchase of PA Semi allows them to control calls to the processor, while competitors have to do massive reverse engineering. Finally, Apple's huge cash horde allows it to negotiate purchases of components at favored price levels. These facts together represent a moat that is difficult to cross for those who wish to compete with Apple. With only 5.2% of the world's PC sales, Apple has room to grow. Add to these facts the potential of iCloud for retaining customer loyalty, revenues from iTunes and the AppStore, increasing penetration of the enterprise market and superior customer satisfaction leads me to think that Apple's profits will continue to grow at better than market rates for several succeeding years. Competitors abound; I think Apple will do better than any single other competitor. Google faces difficult fragmention issues with Android, Dell has nothing to differentiate itself in the PC arena (although its services business looks good but is up against IBM and HP), HP has mixed feelings about PCs. Acer and Samsung are trying to play copy cat. One of these may come up with a superior product, but so far only Google benefits. Amazon may not have the financial staying power to allow Fire pad to continue as a loss leader. My conclusion: Apple may not retain the majority of pad sales nor increase its smart phone share, but it will continue to rack up the majority of profits within its target market segments. For those willing to buy and hold for three to five years, expect profits to double or triple from here. How the market will evaluate Apple's performance remains to be seen. I view Apple as a strong value play with superior growth potential. Politicians will continue policies that harm our savings (very high probability of massive inflation over the next decade or longer), but companies with strong financials, commanding customer loyalty and outstanding products will maintain or increase share value in constant dollar terms. The downside: when you sell, you will be taxed on cap gains that will largely be illusory. If income taxation is discontinued and revenue is raised through consumption taxes, this problem will be resolved. Chance of that happening? North of zero and south of unity.

  • Report this Comment On November 21, 2011, at 10:58 PM, meddguy wrote:

    I have been using Apple computers since 1989, but I (unfortunately) never bought the stock.

  • Report this Comment On November 22, 2011, at 1:55 AM, Jfloodkc wrote:

    Have always been a Apple/ Mac guy from the very beginning. Wish I bought in the dark days before the return of Apple/Mac wizard Steve Jobs. Bett late than never.

  • Report this Comment On November 22, 2011, at 2:15 AM, elansea wrote:

    Apple make great looking, but hugely overpriced toys. It is the best marketing company in the world.

    I'm a PC, but I wish I'd bought Apple shares a few years ago. The company's products are limiting in the real world, but its shares seem to know no bounds!

  • Report this Comment On November 22, 2011, at 6:19 AM, jericho61 wrote:

    Apple is a great company. I am adding to my positiion today. It's a good buy considering it far below $400.00 a share. Now is a very good time to get in.

  • Report this Comment On November 22, 2011, at 7:54 AM, jdmeck wrote:

    I'm a MAC. But to bad the MAC killed the Amiga. The Amiga was the best Personal Computer ever built. What Commadore lacked was a person like Steve Jobs.

  • Report this Comment On November 22, 2011, at 8:28 AM, goldsheld wrote:

    Disclaimer: I am an Apple stockholder. Now that that is out of the way I think people who think the sock is expensive are not seeing the big picture. And the picture is VERY BIG indeed!.

    1) The iPhone was a dramatic leap ahead of smartphones when first released. And though some claim to be catching up, there remains the benefit that Apple controls the hardware and software and vets all apps before they can be sold for the iPhone. The iPhone and the apps, almost always, work very smoothly together.

    2) The iPhone is only beginning to sell in China, the largest smartphone market in the world.

    30 MACs are much better VALUE than PCs. MACs are more expensive, but last longer and are technologically up-to-date 3-4 years longer than PCs.

    3) If you buy AppleCare (Apple's 3 year warranty) Apple will REALLY HELP YOU. They EVEN ANSWER THE PHONE! Try that trick with other PC makers.

    4) If you are REALLY in trouble, Apple will almost always help you out if you bring your device to a store.

    5) Apple is likely to soon release the Apple TV ( I do not mean the curent device; I mean a true TV that destroys the competiton in terms of sound quality (surround sound without speaker wires all over the room) and ease of use. One proposed technology is Siri i.e. You would say "Law and Order" and the channel would change to show Law and Order.

    6) Apple designs YEARS in advance. Rest assured they have the NEXT fantastic thing ALREADY in development. Who knows: maybe an ap and device that controls your fridge, reezer, refrigearator, heating, air conditioning, all remotely from your ipHone... Think about it. You program in the regular items you like to keep in your fridge and apple technology keeps track of when Diet Coke, butter, orange juice, whole grain bread etc. have been out of the fridge overnight (indicating you have run out). In the morning you go to "Fridge manager" and print the shopping list. I do not know if THIS (taking iver the kitchen is APPle's NEXT move after the soon-to-be-released AppleTV takes over the living room. But I know these 2 things:

    1) Apple products enrich my life and 2) Apple products work!

  • Report this Comment On November 22, 2011, at 8:38 AM, goldsheld wrote:

    Stated simply: Apple will continue to grow by leaps and bounds for at leats a decade, based on current technology and the soon-to-be-released Apple-branded TV. and remember, foe each device, Apple also makes money with each app sold, each TV episode sold, each song sold through iTunes. Think of all the vinyl LPs and CDs the last two generations have bought. Well, current 6-year olds- through- 30-year olds and going to buy all THEIR music MOSTLY through iTunes.

    Finally, the iPAD is just beginning to gain traction, and low-cost Phones will eventually be sold for in third-world countries.

    In my humble opinion, if it does not split. Apple stock will reach $1,000 share by 2015.

  • Report this Comment On November 22, 2011, at 10:51 AM, mwphelps wrote:

    Mac user since the original 128K Mac in 1984. (Still have this one in its original box.) Have owned so many Macs over the years, I have lost track. Converted my office of about 50 people from a painful existence of MS-DOS to Mac starting in 1987 (only to have the higher corporate IT org walk away from the Mac in the late 90s). President of a Mac user group for 7 years. After fighting for respect for the Mac for so long, am now ecstatic that the world seems to have finally realized the wonderful world of Mac computing, and is adapting it in large numbers. Also glad to see the parallel worlds of mobile devices from AAPL are broadening the interest in the Mac. Became an AAPL investor in 2003, buying in at $10/share. (Even with the current share price oscillations, color me HAPPY!)

  • Report this Comment On November 22, 2011, at 11:18 AM, AndySpry wrote:

    Been a Mac since 1995 (Mac 512k was my first). Currently a Mac Mini, iPhone 4s, and iPad 2.

    Long Apple since January 1997. Split adjusted my cost basis for my original investment is under $3.00. All in a Roth IRA.

  • Report this Comment On November 22, 2011, at 12:42 PM, LWILLS wrote:

    I've been a Mac since the 80's LOL!!!! Am also a long-term stock holder.

    Currently own: iPad, iMac, MacBook Pro, iPhone, iPod (all different versions), Apple TV, etc., etc.

    Long story short, I am SO glad to see Apple's computing philosophy catch on. Not because I own the stock (tho that is nice) but because it is as it should be. RIP Steve, and mac-on you folks at Apple!

  • Report this Comment On November 22, 2011, at 12:59 PM, hemhog wrote:

    Bought my first Mac in 1989. Can still draw a recognizable face of anyone I know on it. -- In color!

    Every Mac I have ever had still works, and there are many. Some now belong to friends and relatives. Others are stored, such as the MAC IICi of 1989.

    I built a 9,000 customer database for the flowers I breed on that first Mac, and used it to do my first color catalog. My 9,000 catalogs cost me less than $7,000. My competitors' similar catalogs, using Windows, cost them more than $20,000. I always encouraged my competitors to stick with Windows.

  • Report this Comment On November 22, 2011, at 1:02 PM, pcboy53 wrote:

    I am a PC. I have many PCs running Windows 7 perfectly, including a Windows Media Center that is my DVR hub for the whole house. I stream freely recorded content to multiple Xboxes. I have a Windows Phone 7, Zune with Zunepass subscription rentals where I can download pretty much whatever I want and keep 10 DRM free songs each month, Kinect and love all of it. I even have a multi-touch Acer tablet running Windows 8 that cost half of what an iPad does and it works perfectly for everything I need it to do.

  • Report this Comment On November 22, 2011, at 2:01 PM, PostScience wrote:

    For those who think that the stock is overpriced, consider that Apple is adding to it's cash pile at almost $10 billion per QUARTER.

    Assuming 20% growth next year, and 10% per year thereafter, and counting the $86 billion currently on the books, Apple will have cash equal to its entire current market cap sometime in 2016-17.

    Barring another market collapse, Apple is not going to $300 per share. Ever. Most likely $1000 in 5 years, with $350 per share in cash.

  • Report this Comment On November 22, 2011, at 2:47 PM, CluckChicken wrote:

    I'm a PC because well most of what I use for work only runs on Windows and I can not justify the extra cost of an Apple.

    "3) If you buy AppleCare (Apple's 3 year warranty) Apple will REALLY HELP YOU. They EVEN ANSWER THE PHONE! Try that trick with other PC makers."

    Saddly I have seen this in use and my uncle, who has been a Mac since the 80s, has had very different experiences then you put forth. He got a new Macbook about a month ago from one of the stores. Seems he had bad luck and got one with several bad parts, several long phone calls, 1 of which I was on, I was asked to check to make sure I plug the monitor into the correct port. Finally I took the unit back to a store for a replacement, this was an experience all in itself. Took 40 mins to get a new unit (10mins trying to get help) even with an email from customer service saying a new unit was need.

    BTW I know how to improve Apple's bottom line. The Apple store I was at had 49 employees "working" and 3 state police as guards. This was a non-holiday saturday evening. The most 'customers' in the place at any given time was 16 during my 50 mins in the store.

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