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Is Apple Wasting Its Time on Macs?

Hewlett-Packard (NYSE: HPQ  ) is still on top, and gaining. Dell (NYSE: DELL  ) is slipping. Apple (Nasdaq: AAPL  ) is still a darling, with a pair of asterisks that I'll get to shortly.

That's the gist of industry tracker Gartner's latest quarterly read of PC sales in this country.

The picture itself isn't pretty. Gartner estimates that 15.5 million PCs shipped during the quarter, a 3.5% decline from the first three months of last year. Globally the snapshot isn't as problematic. Worldwide PC shipments posted a 1.9% year-over-year gain.

However, let's take a closer look at the market share changes over the past year in this country.

  2012 Q1 Market Share 2011 Q1 Market Share Unit Growth
HP 29.0% 26.2% 6.6%
Dell 22.3% 22.3% (3.6%)
Apple 10.6% 9.8% 3.8%
Acer 9.1% 11.9% (25.9%)
Toshiba 8.7% 10.4% (19.2%)

Source: Gartner

The first of Apple's asterisks is that HP actually posted stronger year-over-year growth than Apple. This bodes well for HP heading into its upcoming quarterly report. Naturally, this doesn't look good for Apple ahead of its report later this month, but just remember that Macs are no longer a material driver for the Cupertino titan. IPad and iPhone sales made up 72% of its holiday quarter revenue, with Macs accounting for a thin 14% slice of the revenue mix.

The second asterisk is one that you won't see from this table. We have to dig up Gartner's data from January to show market share data for the fourth calendar quarter. Apple had a chunky 11.6% of the U.S. market during the period. It's now down to 10.6%.

There's a good reason for this. Apple is a consumer-facing beast. Of course it's going to have a robust holiday quarter. Why wouldn't the company stand out against its corporate-facing rivals with smoother seasonality? It's Christmas!

Well, there's a problem. If we go back a year, Apple went from a 9% share of the market during the 2010 holiday quarter to 9.8% during the first three months last year. There was sequential improvement then. Why isn't it happening now?

Thinking outside of the box
Apple's present -- and undeniably its near-term future -- is more about iOS than Mac OS. Isn't it better if Apple simply focuses on those platforms and nixes its Macs and MacBooks?

Before you answer, consider that after a decade of the "halo effect" of the mass market appeal of the iPod, Apple is still eyeing just 10% of the PC market domestically, and roughly half that on a worldwide basis. Why keep cranking out costly computers that may not be as flattering to the Apple brand as its more pocket-able products?

So should Apple do it? Should Tim Cook kill that Mac?

Are you insane?

I was only testing you. I didn't think you'd actually whip out the dagger. It doesn't matter if Macs are a small part of Apple's growth strategy these days. Walking into an Apple Store stocking only iOS gadgetry wouldn't feel the same. Macs fall somewhere between historical landmarks and sacred artifacts.

Even if just 10.6% of the country is buying Mac desktops and portables, the last thing that Apple would want to do is upset the folks owning the true calling card of diehard Apple fans.

Besides, Apple's market share has come a long way. Just eight years ago, Apple was looking at a 3% sliver of the stateside market and less than 2% of the worldwide base.

Life after the Mac
Maybe the Mac in particular and the PC in general are peaking. The "good enough" computing revolution that Apple started with the success of its iPhone and iPad continues to victimize traditional PC dekstops and laptops, at least in this country.

However, even if that thesis continues to play out, Apple has better things to do than pry MacBooks from a fanboy's cold, dead fingers. Letting the long tail for PCs play out makes far more sense than putting all of its eggs in the iOS basket.

If you haven't read about the two words that are giving Bill Gates and Steve Ballmer fits, it's a free report so you as may well check it out now.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended writing covered calls on Dell. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (13) | Recommend This Article (3)

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 April 12, 2012, at 10:42 AM, Johncarringer wrote:

    It might be interesting to do the comparisons in terms of "dollars' worth" of PC's shipped rather than units shipped. Just a thought.

  • Report this Comment On April 12, 2012, at 10:45 AM, jimstead wrote:

    This is business. The mac is highly profitable and Apple's 10% market share means that there is plenty of room to increase sales, even in a flattening product area. How many huge businesses are there for Apple to enter?

  • Report this Comment On April 12, 2012, at 10:52 AM, JStodola wrote:

    To drop the Mac, Apple would also have to rework iOS development. Right now, it pretty much requires a Mac for the best development support since Xcode is a Mac-only product.

  • Report this Comment On April 12, 2012, at 11:13 AM, Sprangers wrote:

    You ar correct - I love my Apple toys but my Macs are the work horses in my life - on the road, at home & in the lab and I loathe working with PCs. Sorry.

  • Report this Comment On April 12, 2012, at 11:30 AM, 1984macman wrote:

    The mere fact that Apple has only 10% market penetration on "traditional" computers suggests how much potential they have for growth in that segment. And as I sat here, the secretary in the office I'm waiting in whipped out his iPod Touch....

  • Report this Comment On April 12, 2012, at 12:02 PM, applefan1 wrote:

    The desktop and laptop computer market is still quite viable. Look at their growth. 14 years ago they were at 3%, so they have essentially tripled their market share. Laptops and desktops may not be as high of growth market, but it is still bringing in the revenue and profit margin, it is still growing and it is still very much part of their ecosystem. We are just seeing another new market segment which is smartphones and tablets, which are high growth because of the barrier to entry for people to buy one is much lower than a desktop or laptop, but for the people that want and need a bigger more powerful computer will still upgrade their existing systems from time to time, plus there is a growth in new users every year as the population increases and the emerging third world countries that are creating wealth.

  • Report this Comment On April 12, 2012, at 12:15 PM, Realexpectations wrote:

    Let's not forget

    If Apple has room for growth....

    So does everybody else

    It's called a free market

  • Report this Comment On April 12, 2012, at 1:08 PM, SkippyJohnJones wrote:

    @TMFBreakerRick - you mentioned that last year Apple saw a market share pop on a q/q basis going from Christmas into Q1, and that the company failed to repeat the feat this year. It's pretty simple; Apple released the new MacBook Air design and sharply reduced prices in October 2010. It instantly became the new reference design and the product to beat in the laptop space. The computer proved so popular that Intel went all in on Ultrabooks, essentially forcing Windows OEMs to create competitors to MBA.

    That was 15 months ago. The product saw a minor spec upgrade last year, but nothing noteworthy. It's still beautiful, but it is getting a bit long in the tooth. Remember just 6 months ago when the company reported "disappointing" earnings on the back of lower iPhone4 sales before the product refresh? Remember how the sales took off days after the quarter closed thanks to the 4s? I think it's pretty safe to anticipate a major refresh in the laptop lineup in the next few months, and that sales will see a near instantaneous pop that carries through back to school and Christmas shopping seasons.

  • Report this Comment On April 12, 2012, at 1:20 PM, eldernorm wrote:

    Why is it that almost every FOOL analyst just cannot think beyond market share.

    Does profit enter anyones little mind. Apple makes tons of it. If HP is so great with its great market share, why is its market cap so totally crap???

    Macs make up the base of the pyramid and everything rests on that. Sure Windows exists but also as a patched add on. Want an easy life, go Apple.... all the way. I even run Win 7 on my Macbook pro cause I have some legacy programs.

    Just a little brain power here guys.


  • Report this Comment On April 12, 2012, at 1:44 PM, CluckChicken wrote:

    The PC market tends to slow in the year prior to MS releasing a new OS.

    Apple Mac sales tend to cycle as they release "new" versions of the hardware.

    The way Apple runs its Mac does not fit with the way businesses run. Apple forces OS upgrades, this is not something businesses are overly thrilled to do, Apple is very secritive about what changes are happening and does no beta testing, businesses do not like surprises when it comes to core business tools. The Apple Mac will find some small company "wins" but they will never be a major business world tool unless they change and Apple has no interest in changing. Apple just doesnt want the business market and without the business market Mac will never hold a large % of the total market.

  • Report this Comment On April 12, 2012, at 1:46 PM, applefan1 wrote:

    The Windows market is not growing as much because Microsoft doesn't release major OS releases as often as Apple, Microsoft users are becoming more aware, due to recent comparisons between OS X and Windows (plus Mac users can run Windows if they want to) and that is why some companies and individuals are switching from WIndows PCs to Macs and that deters growth for Windows to the Mac market. What, you think that companies that have recently switched or are in the process of switching from Windows to Mac are making these decisions without having contact with upper management at Apple first? Come on. Mercedes Benz is shifting from Dell to Apple. Cisco is increasingly buying Macs for their employees than Windows boxes, other major companies are doing the same thing. They all get executive briefings with all the major hardware and software vendors and Microsoft is scared.

    It almost seems as though Windows 8 may not be enough. Metro has mixed reviews. In the mean time, Apple just plods along improving the ecosystem bringing innovation where they see fit and not trying to sell a spec for a box. When comparing what platform to go, the least important thing is that one does a certain task 10 seconds faster. Overall, comparable systems, the both have fairly equal performance, one is faster at one task, while the other is faster at another task. Overall, Apple provides more of what these companies need. The only area that Apple isn't strong at is the high end server market. But that area has at least 20 different vendors competing. The high end server market has HP, Dell, Oracle/Sun, IBM, CIsco, Vision, Cubix, NEC, this list goes on and on and on. Apple is just focusing on their core competencies. I guess maybe they are watching the others battle things out until they make a decision. Remember, Apple's cash is growing, so maybe someday they might have to just simply buy a server company, just to complete their ecosystem.

  • Report this Comment On April 15, 2012, at 5:16 AM, justmeblue wrote:

    I'm new to the Mac this past year. What did I do, what most people do and think that Windows is the only option? I must have listened to all of the Apple and Mac bashing? I've seen more and more people such as myself, try a Mac, and stick with it. I simply love it. It's a fantastic machine, with less hassles to deal with that you have on a Windows machine. Now I can actually use my computer and not waste so much time messing with Windows problems, programs not running right, messing with the registry, dll problems, day and night scans for malware and viruses and yes I know that a Mac can become infected which is why I run AV software. My doctor said to me I am surprised that you are not using a Mac, he knows me very well. After hearing that I tried one. Thank You to my doctor! Corny or not I love this machine. It's actually a pleasure to use. Thanks.

  • Report this Comment On April 15, 2012, at 5:22 AM, justmeblue wrote:

    Locally in the past year we've seen our Doctor's office, the hospital, the Oral Surgeon, a Steel Corporation, and more, switch to using Macs. I think this trend will continue if people will actually try a Mac. I will never touch a PC again unless it's the only choice left.

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