Unless you've been living under a rock for the past few years, you probably know that PC sales have been lousy recently. Heavy hitters like Hewlett-Packard and Dell have seen significant declines in PC revenue and even greater drops in PC margins. However, Apple (NASDAQ:AAPL) -- which contributed heavily to the PC market's woes with its revolutionary iPad -- remained unscathed for a long time.
Indeed, as recently as FY12, Apple's Mac product line generated solid 9% unit growth and 7% revenue growth. In contrast, Mac revenue dropped 7% and Mac unit sales dropped 10% in FY13.
The PC market finally seems to be bottoming out, but the two top PC market research firms don't agree on whether that was good news for Apple's Macs. IDC thinks that Mac sales slid yet again last quarter, but Gartner believes Apple achieved rapid growth! We'll find out for sure who is right when Apple reports its results later this month, but Gartner's data seems more plausible.
Projecting Mac sales
IDC and Gartner both agree that the global PC market shrank last quarter. IDC estimated the unit sales decline at 5.6%, while Gartner pegged the decline at 6.9%. However, when it came to estimating Apple's place in the market, the two firms diverged completely in their projections.
IDC believes that Apple's U.S. unit shipments declined 5.7% year over year. That's actually worse than the U.S. market's overall performance, which IDC estimates at a 1.6% drop. By contrast, Gartner estimates that Apple's U.S. shipments surged 28.5% to nearly 2.2 million!
Unfortunately, neither IDC nor Gartner provided an estimate for Mac sales globally, because Apple is not one of the top 5 PC vendors worldwide. Still, the U.S. is by far Apple's top market for Mac sales, so the company's performance at home is the most important factor in determining global Mac sales. Fortunately for Apple's investors, Gartner's sales estimates seem more plausible than IDC's dour view.
An easy comp
The primary reason why Mac sales probably rose in the recently ended Q1 of FY14 is that the comparison to the prior-year Q1 is particularly easy. In Q1 of FY13, Mac sales plunged 22% year-over-year to 4.06 million. To some extent, Apple was a victim of the broader PC market malaise and a shift in its fiscal calendar, but Apple's biggest problem was self-inflicted.
In late October -- near the beginning of the quarter -- Apple unveiled a radical redesign of the iMac all-in-one. However, the company could not supply many of the new models during the quarter. Meanwhile, the company quickly ran through its stock of previous-generation iMacs. As a result, Apple had hardly any iMacs to sell during the peak holiday buying season!
Indeed, Tim Cook later admitted that if given a "do-over," he would have waited until January or thereafter to announce the new iMacs, rather than unveil a product that wasn't quite ready for volume production.
In short, the big drop in Mac sales in Q1 of FY13 was largely attributable to the iMac shortage, and there was no comparable event this year. That quarter represents the only time in the last 30 quarters that Apple's Macs failed to gain share within the PC industry. Between Apple's solid momentum within the PC industry and the easy comparison, it would be extremely surprising to see a year-over-year drop in Mac sales when Apple reports results later this month.
New products and add-ons
There are a few other factors that should have boosted Mac sales last quarter. For example, Apple has updated most of its Mac lineup recently. The iMac was refreshed in September, and Apple released new MacBook Pros in October. Apple also updated its OS and productivity suite last fall.
Furthermore, Apple's Mac prices are a lot more compelling than they were in the fall of 2012. Not only did Apple drop prices in conjunction with many of its recent Mac launches, but the company also offered some promotions during the quarter to boost sales. These moves obviously reduced the Mac average selling price, but they should have given unit sales a big jolt.
Time to wait and see
Apple will report Q1 earnings on January 27, so we'll find out then just how the Mac has fared. While IDC has estimated that Mac sales declined further last quarter, the easy comparison to the previous year makes me quite skeptical of that projection.
On the flip side, Gartner believes that the Mac lineup may have achieved nearly 30% year-over-year growth last quarter -- at least in the U.S. If that's the case, Apple could potentially recoup all the ground it lost in the fall of 2012. That may be too much for investors to hope for, but the odds appear to favor a solid bounce-back quarter for Apple's Macs.