Apple Has a Bigger Problem Than You Think

Things just aren't getting any easier for the PC industry.

Industry tracker Gartner is out with its quarterly metrics for the computer market, and things don't look good for the desktop and laptop markets.

Worldwide shipments fell 10.9%, to 76 million units. It's the fifth straight quarter of declines for the industry. That's never happened.

Microsoft (NASDAQ: MSFT  ) updating its operating system late last year was supposed to be the catalyst that triggered an upgrade cycle, but we're now three quarters into the Windows 8 era. It's just not going to happen. Folks are loading up on tablets, especially in emerging markets, where tablets are the new laptops. Smartphones are also dampening the demand for full-blown PCs, and that's bad news for Microsoft in a world where most tablets and smartphones run either iOS or Android.

There were some notable moves during the period. Lenovo overtook Hewlett-Packard (NYSE: HPQ  ) to ship the most computers worldwide during the past three months. Dell (UNKNOWN: DELL.DL  ) remains a distant third.

However, things were interesting closer to home, with PC shipments only declining by 1.4%, to clock in just shy of 15 million units.

HP and Dell retained their top positions, and Dell actually saw year-over-year domestic improvement. Then we get to Apple (NASDAQ: AAPL  ) , where the Cupertino magic is running thin.

 

Q2 2013

Share

Q2 2012

Share

Growth

HP

3,957,761

26.4%

3,976,041

26.2%

(0.5%)

Dell

3,681,725

24.6%

3,458,736

22.8%

6.4%

Apple

1,740,500

11.6%

1,818,959

12%

(4.3%)

Lenovo

1,515,562

10.1%

1,266,109

8.3%

19.7%

Source: Gartner (July 2013).

You may notice that Mac daddy posted the largest year-over-year decline, but perhaps even more surprising is that Apple is the only one of the four largest players to actually see its market share contract during the period.

Remember Apple's halo effect? When the iPod took off, it triggered a spike in Apple computer sales. The halo effect didn't show any signs of slowing during the iPhone and iPad rollouts, but the class act of Cupertino is certainly vulnerable now.

Apple is still selling plenty of iPads and iPhones, but for some reason, the halo effect is no longer working. The consumer tech giant may have done too good a job with its mobile devices, giving Mac fans fewer reasons to pony up for new Apple computers. 

There could be an even scarier explanation. What if Macs are no longer cool because Apple is pushing older iPhones and iPads that carry lower price tags, but also make Apple seem less stylish and innovative? The same halo effect that sent folks scrambling toward Apple products may now be repelling computer shoppers. That would be a dreadful scenario, and it's one that Apple better make sure isn't the case. 

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Read/Post Comments (26) | Recommend This Article (9)

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 July 11, 2013, at 8:58 PM, hx7 wrote:

    I have owned 2 iMacs and 4 MacBook Pros. $ of them are more than 4 years old and running like new.

    Could it be that they are so good that I do not need to change them so often? Unlike some other pc's I had before?

  • Report this Comment On July 11, 2013, at 9:45 PM, OldTimeFool wrote:

    Have to agree with the possibility that Apple builds quality products and therefore many of us people who experienced the "halo effect" don't need to run back and buy new macs. I have a first generation iPad that I bought four years ago and I have a MacBook that I bought in 2008. Both are still running strong (I did upgrade to a MacBook Pro about a year ago) although I do notice some slowness that is more related to the complexity of what is being run.

    Either way as long as Apple is retaining the customers that it has and adding news one (albeit more slowly than in the past) apple isn't in as much trouble as you state.

    And if you are wrong, and Apple is able to innovate something ground breaking, than Apple is back in business in an even bigger way.

  • Report this Comment On July 11, 2013, at 9:50 PM, singaporenick wrote:

    The kind of article you can write in two minutes on the back of a matchbox.Nothing new,nothing significant,nothing original.nothing worth saying

  • Report this Comment On July 11, 2013, at 10:20 PM, MightyMinnow wrote:

    Peeping Uncle Sammy might have something to do with it. I hate posting anything now days. Its all about keeping track of me. This is a dangerous place. Only a fool (yuck yuck) can be found here.

  • Report this Comment On July 11, 2013, at 10:24 PM, MightyMinnow wrote:

    I never send emails. I hate nosy advertisers and resent them peeping tommy's trying to sell me stuff. My snail mail box is getting all the action now days.

    Apple is smart to hold back on innovation because nobody wants to upgrade. Big brother is bad for business.

  • Report this Comment On July 11, 2013, at 10:39 PM, giuseppe1149 wrote:

    Whoa, Rick, you really stirred up a hornet's nest by criticizing the almighty Apple. As you would have expected, the Apple accolytes have come out in full-throated defense of their precious Apple. You even get comments like that from PocketsX in which he makes a disparaging remark to you. What he says is laughable considering he can't even use proper English himself. Hahaha

  • Report this Comment On July 11, 2013, at 10:49 PM, spakklal wrote:

    You should see stats before misleading your readers. PC is losing market share for the last 5 years. Mac Sales has grown 15% annually for the last 5 Years. Mac Profits is greater than entire PC Industry. Please review the following article to get more info on the profits in the PC Industry.

    http://www.todaysiphone.com/2013/04/mac-profits-greater-than...

  • Report this Comment On July 11, 2013, at 11:27 PM, RaulR2 wrote:

    I am not going to spend more than 30 seconds to comments your stupidities. I am strongly disappointed not with you but with Motley Fool which publishes articles from disqualified people like you.

  • Report this Comment On July 11, 2013, at 11:29 PM, Brains913 wrote:

    How about they price their computers at a slight margin higher than an equivalent PC instead of 2x and 3x? It could be consumers don't see that much of a value in Apple products.

  • Report this Comment On July 11, 2013, at 11:38 PM, JHawkinTexas wrote:

    LMAO! Don't you think you're cherry picking the data a little bit Mr. Munarriz? If you did a little more research, you may have run across this article (http://www.macrumors.com/2013/01/14/apple-maintains-third-pl... written at MacRumors in January of this year that shows the Apple PC trends (using Gartner data) since January 2006. There is a nice trend chart that shows the usual ups-and-downs over a year (Q3 being strongest for Apple because of back to school) but what is astounding is that Apple has more than TRIPLED its market share since 2006! Yes, that's right, TRIPLED! No other vendor, NOT ONE, has even come close to that.

    If that's not a halo affect, I don't know what is.

  • Report this Comment On July 11, 2013, at 11:41 PM, marv08 wrote:

    @peto3: While I do agree with you in general... I have to state that a Steely Dan reference is pearls to swine here.

    ===

    Apple is the only of these companies that makes up more than the lost PC sales in tablet and smartphone sales. Many times. Calling that a problem is the ultimate in cluelessness.

    I have no idea what Apple's results will be, but even you should know that neither IDC nor Gartner do have any access to any real sales numbers. Not even in the US. But Apple's sales (for many years now) have grown faster outside of the US than domestically. And both, Gartner's and IDC's, international sales estimates for Apple have been off significantly many times (and completely unproven for the majority of ODMs that do not even release sales numbers).

    Apple has a problem, if they do not meet their guidance. Until that happens, everything is drivel.

  • Report this Comment On July 11, 2013, at 11:42 PM, thedefect wrote:

    The hostility here from Apple fanboys is intense. There's nothing here that's remotely insulting to Apple, people. Back off.

    The PC industry is contracting, and that goes for all PCs, including Macs. It's partly because Apple has gotten people into tablets, so people are going towards their cheaper iPad options as opposed to the massively overpriced laptops and desktops they sell. A lot of it is a transition of existing customers, so although they have fewer people buying the pricier items, they do have a lot of people who never would've bought a Mac who now own an iPad. In the end, it's a boost for Apple.

    However, I would disagree with the sentiment that Apple's build quality has prevented people from needing to buy new laptops. It's no coincidence that when the PC market is contracting, so is the Mac market. Unless you want to argue every single PC manufacturer is just making their products too good?

    Moreover, virtually every Mac user I know tries desperately to upgrade to the new line of computers as soon as possible, because Apple products typically have a fashion element to them, and you don't want last season's model. I'm not saying this is the norm, but it's a far bigger motivator for Apple owners than it is for any other tech product. As such, build quality is very unlikely to be a factor. I'm not saying they don't have high build qualities, I'm just saying it's not a factor here. Apple's remarkable success in the tablet market is undoing PC sales, even their own. That's what it boils down to.

  • Report this Comment On July 11, 2013, at 11:54 PM, SanPasqual wrote:

    And ... then there was Q2 2013 with several huge pending spec changed for Apple. Why buy a crippled Mac Pro or MacBook Pro, today??? A big spec upgrade can be worth the wait for a user, even when the shareholder is chomping for instant gratification.

  • Report this Comment On July 11, 2013, at 11:55 PM, ScottAtlanta wrote:

    Or even "scarier"...the reality that Apple was a first mover...but now Android has caught up and even surpassed... and offers more choice all at a lower cost. That there was no "moat"...just glossy and overpriced toys.

    Rick....I hope you're wearing armor or at least carrying a shield to protect you from all the flung Apple bricks that will come your way for shunning the Cult of Apple.

  • Report this Comment On July 12, 2013, at 12:02 AM, JHawkinTexas wrote:

    @thedefect

    There may be a little "fanboy" hostility towards this article but I really can't blame them. The author selected one quarter of data and drew conclusions that are clearly misleading, at best, or, at worse, a thinly veiled attempt to knock Apple down. If you follow the link to the MacRumor article, you will notice that (from Gartner data) Apple had less market share in Q2 2012 from Q2 2011, which had less market share from Q2 2010. However, if you take all the data in context, you will notice Apples astounding market share growth since 2006.

    It took me less than 30 seconds of web searching to discover this data.

    Let's call a spade a spade. The author did a shoddy job. After looking at the trend data, what do you think about the voracity of this quote now:

    "Remember Apple's halo effect? When the iPod took off, it triggered a spike in Apple computer sales. The halo effect didn't show any signs of slowing during the iPhone and iPad rollouts, but the class act of Cupertino is certainly vulnerable now."

  • Report this Comment On July 12, 2013, at 12:14 AM, normgarry wrote:

    THERE IS NO SUCH THING AS 'THE DEATH OF THE PC".

    Windows 8 is TERRIBLE and until Microsoft fixes it and stops trying to change it to make it more like a tablet, it will remain broken.

    As for Apple, Apple's products are luxury devices. The ipod and iPhone are the only affordable devices they have. The iPad mini is completely outshined by the Nook HD Plus which costs less than half as much. I don't need aluminum to use a tablet - plastic is fine.

    People who've bought into Apple's ecosystem aren't likely to leave. Same goes for Android. HP and Dell continue to own the PC market.

  • Report this Comment On July 12, 2013, at 1:51 AM, Panth wrote:

    Wow, Appleheads get hot fast! Some of the comments are very poor, such as the one stating the year on year growth for the mac at 15% for the last 5 years, when the graphic shows otherwise. Granted, Overall year on year sales numbers would be better than just one quarter, but I suspect they would show the same. Face it, PCs and laptops, no matter who makes them, are not selling as well. For most people who want to check e-mail, do a bit of social networking, etc. the tablet option is just what they need, and do not need a PC.

    Keep in mind that the Motley Fool is a Stock Adviser service, not a product adviser service. They are not here to critique the quality of the product itself, but the quality of the company and the stock going forward. If all the Appleheads decided to buy the stock instead of the product, the stock would go up, and I might buy back in.

    Apple still sells a lot of phones and tablets, and are still profitable, and will continue to be for some time. All companies at some point go from being a growth company to a stable, slower growth company, and Apple may be at that point now.

    Comments about build quality are appropriate to the article too, not just for Apple, but for all, particularly desktops. It used to be you had to change your computer every two years to get decent productivity, as the software kept getting bigger and bigger, but that trend has slowed as well, with many 4 and 5 year old computers doing just fine.

  • Report this Comment On July 12, 2013, at 2:09 AM, macartshow wrote:

    Yep your a fool!

    People are waiting to buy, new iPad, iPad Mini, iPhone, MacBook Pro's are on the horizon, why would we buy now fool.

    Don't worry about Apple their fine, the only problem is there seems to be an analyst in every garage in America and think they know what is going on and they continue to prove they don't know a F@$%ing thing!

    Apple is locked up tighter than Fort Knox, yet were supposed to believe that somehow critical info was leaking out to some fool with a blog in Kentucky! Wake Up!

  • Report this Comment On July 12, 2013, at 3:36 AM, aeosfool wrote:

    First off, you are taking statistics from one quarter and drawing conclusions without any consideration of longer term trends or short term events that may affect market share.

    First off, the long term trend is still way up for Apple as far as computer market share goes. Secondly, most people knew they were introducing new laptops at their developer conference held at the end of the quarter..which they did. More new models and new software are due soon. Sales are highly dependent upon new introductions of hardware/software...so I would look at sales the next couple of quarters before coming to the conclusion that "Apple has a bigger problem than you think"

  • Report this Comment On July 12, 2013, at 4:03 AM, Asmodeus1971 wrote:

    OK, I have read a lot of these comments and find them and this article to be funny.

    I agree with the one guy and disagree with him at the same time. People don't need to replace the computer they have because they are made so well and can hold up longer. The disagree part was him making reference that it was only true to Apple because they make such high quality devices. I have 2 desktops in my house, one custom made that is 4 1/2 years old and another which is just used as a basic portal that is an HP and is older to the point it was originally an XP Pro SP1 computer from the factory. I also have two laptops 2 1/2 years old and 5 1/2 years old.

    They all work fine and do there jobs with no problems. I have no need to upgrade as improvements will only be marginal. 3 are running Windows 7 Home Premium and the older of the two laptops is running Windows 8 Pro.

    I have one tablet in the house and it is a toy. I will be buying A W8 tablet when the new Intel CPUs get more widespread and prices drop below $300 because a tablet is mostly a toy to me and I have better use for my money. The tablet I have is an Android 4.1 tablet with a dual core CPU that cost under $90 with a two year accidental damage warranty and is a toy for my 8 year old.

    Smartphones are even more useless than tablets. They are too small for any decent function and people need to disconnect. I may get a tablet with 4G service and use Google Voice and skip the whole mobile phone thing all together as it gets harder to find a decent mobile phone that is just a phone. At least a 7" tablet has some function but honestly people need to get unplugged.

    I am so tired of seeing people with a screen connected to their face 24/7 and really not be getting any more accomplished than people did 20 years ago without all these devices. If you truly were achieving something that would allow you to live better it would be understandable but in truth the only thing these devices are causing is for people to be unplugged from life outside of the box.

  • Report this Comment On July 12, 2013, at 5:15 AM, ddillan wrote:

    For what it's worth re: maybe they make them too good..." Both my boys got Macbooks when they went off to college, One graduated a year ago, one this past spring. Both still have those Mac's and both work/run like the day they got them. I, on the other hand, am on my second piece of crap, junked up laptop provided by my company. I wouldn't call my kids "Fanboys" but I can tell you their experience with Apple will keep them looking at their products first.

  • Report this Comment On July 12, 2013, at 5:40 AM, DalePlourde wrote:

    Macs are doing very well considering PC sales globally are falling, Macs continue to sell although 2013 Q2 sales were the same as Q1 but this is great when other companies PC are falling. As well many folks were waiting for the new MacPro and air updates which just occured before buying a new one. Macs will continue to do well as they have a reputation for durability, reliability, being userfriendly, have all functions needed, ect.. The author has clearly not done his research as he suggests without providing any fact based reasons that mac sales are down, when actually as mentioned they steady and increasing, this is despite a global slowdown in PC sales. Apple is a well run company providing high quality products yet with fort knox balance sheet and excellent revenue, along with an increased focus on innovation i.e. R&D spending increased by 33% this year, yet Motley Fool continues to write rumour based, non-fact based, poorly written articles about Apple, which discredits motley fool. I rarely read anything Motley Fool writes about any stock, as I find the information largely poorly researched.

  • Report this Comment On July 12, 2013, at 5:43 AM, iSheep101 wrote:

    oooooooohhhhhh are de poor widdle iSheep up in arms cause someone dared to threaten their almighty deity? Maybe people are tired of being soaked for the biggest margins in the electronics industry based on past assumptions that Apple products were the best?

  • Report this Comment On July 12, 2013, at 6:44 AM, Benj563 wrote:

    Apple sales are probably going down because they come out with new products to replace there old products faster than nike coming out with new shoes. Also everything that they sell is overwhelming in price. A simple plastic phone case for an iphone runs a minimum of $20. Customers are probably getting fed up with this. They are nickle and diming there customers just as badly as microsoft.

  • Report this Comment On July 12, 2013, at 6:52 AM, BradApple wrote:

    Drawing conclusions from one quarter's data is highly misleading. Sales vary from quarter to quarter based on a host of factors, among them previous quarter's product introductions and future anticipated product releases. You have to look at half-year and (better still) full-year data to really understand what's going on with market share.

  • Report this Comment On July 12, 2013, at 8:51 AM, diemacdie wrote:

    In the end, price was the factor for me and I have owned both. Yes, Mac's are quite nice but the premium they charge, or command, is ridiculous. We've moved back to PC's, and you know what, the world didn't end and I have quite a lot of money still in my pocket.

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