In Apple's (NASDAQ: AAPL) recent earnings release, the company stated that it had sold 4.8 million Macs during the quarter. Now, in a PC market in which Intel (NASDAQ: INTC) – the PC bellwether – claims that its high-end PC chip shipments are hitting records while the lower end struggles in the face of tablets, this is no surprise. Apple's Macs are as high end and as differentiated as it gets in the PC market.
The impressive number
Apple selling 4.8 million Macs during the quarter is actually exceptionally impressive in this PC market environment. Do note that even with the PC market seeing year-over-year contraction over the last several quarters, Apple managed to grow its unit volumes by 17% (from 4.1 million in the prior year period). Now, some could argue that there is some pretty significant share loss happening in the Windows space (and this is likely to be true), but just how much of the $1000+ consumer PC market belongs to the various Windows vendors to begin with?
The PC's ironic desktop twist
The good news from both Intel's and Apple's numbers is that the high end PC really isn't "dead" – it's actually growing. This is likely due to the fact that people would rather buy something very high end and then not have to replace it as frequently, particularly as much of the mainstream "low end" workloads can be serviced by a fairly inexpensive tablet.
Further, it's interesting to note that Intel saw an 11% year-over-year increase in desktop chip sales (while still seeing a year-over-year contraction in notebook chip sales). This would tend to support the idea that consumers could simply be buying high-end desktops for productivity workloads (with the intention of having that desktop last a good long while) and then buying cheap tablets for "mainstream" uses. Apple, of course, benefits from this trend given its strong position with high end All-In-Ones and the Mac Pro.
Does the notebook eventually bottom?
One of the big problems in notebooks is that at the low end, the systems are often compromised. How often do you see at a typical retail store a $349 notebook that advertises 3.5 hours of battery life, is fairly heavy, has slow mechanical storage, and – worst of all – a ton of "bloatware" pre-loaded? Consumers have continued to vote against these systems with their wallets and have instead chosen to purchase tablets that offer significantly better user experiences.
The good news is that Intel has finally gotten the message and is putting out cheap, low-power notebook processors that should enable some fairly compelling low cost designs. However, this is in many ways like walking a tightrope; PC vendors want to give consumers a reason to buy higher end PCs if they can, but at the same time, the lower end PCs need to be compelling enough to ward off tablets. If Intel and PC vendors can strike this balance, even the low-end notebook market could bottom.
Foolish bottom line
The "PC" isn't dead; in fact, many argue that tablets are simply another form factor of the PC (with broader operating system and processor architecture choice). Taken in this context, the PC obviously isn't dead. However, even looking at the more classical PC market, the high end is well and alive while the low end continues to lose the war against (arguably) more compelling tablets. Apple, of course, benefits from this trend. Intel, on the other hand, has a tougher road ahead, but if it succeeds, it really can own a good chunk of the compute continuum.
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