Apple (NASDAQ:AAPL) recently reported that both unit shipments and revenues of its Mac personal computers rose by 9% year over year in the company's most recent quarter. These results, as CEO Tim Cook noted on the company's earnings call, are extremely impressive given that the overall PC market is said to have declined by 12% in the quarter.
But what is even more impressive is that, on the call, Apple CFO Luca Maestri said the company ended the quarter with Mac channel inventory "slightly below" the company's targeted four-week range.
Given that Apple reported being within its four-to-five week target channel inventory range last quarter, this reduction in channel inventory suggests that Mac sell-through to end customers may have been even better than what the reported numbers indicate.
Why this is such a big deal
It has been widely reported that the rest of the PC vendors are struggling to clear inventories of older-generation products ahead of the launch of the new Windows 10 operating system and new processor platforms from Intel (NASDAQ:INTC).
For example, Intel CFO Stacy Smith said on the company's July 15 earnings call that "PC supply chain inventories declined at a slower rate than we expected, as PC demand weakened further."
Additionally, a report from DigiTimes claims a large number of notebook vendors "are seeing their notebook inventories digesting in a rather slow pace, which is affecting their plans for new products and orders."
In a nutshell, Apple appears to be seeing rapid Mac growth and is seeing strong sell-through of its existing notebooks, while its competition -- in aggregate -- seems to be struggling mightily to sell existing product to make room for new systems.
Apple should have an easier time transitioning all of its products to Skylake
Given that Apple's Mac channel inventories are fairly lean, it should have a relatively easy time rolling out new Mac products based on Intel's newest Skylake processors as it won't have to worry too much about older generation Mac products sitting in the channel.
If Apple is one of the first notebook vendors out of the gate with new systems based on Intel's new Skylake processors (which are expected to bring significant new features and performance benefits), then this could further enhance the value proposition of the Mac over Windows PCs from other vendors.
Does Apple's share gain pose a problem for Intel?
Intel is the main supplier of microprocessors to PC vendors, and is currently the exclusive supplier of PC processors to Apple. Apple seems to have a significant chunk of the high-end consumer-PC market, which means that it is likely buying a much richer mix of PC processors than many of its competitors are.
If Intel's high-end PC processor sales become too dependent on Apple, this might actually pose somewhat of a customer concentration risk to Intel. If Apple makes up a large portion of Intel's high-end notebook chip sales, then Apple may be able to get chips at lower prices than many of its competitors.
That said, at least for a while yet, Apple is essentially "stuck" using Intel for its MacBook product line; AMD -- Intel's only competition in the PC processor space -- has yet to prove that it can deliver leadership products suitable for Apple's premium Mac products.
Additionally, while it has been much talked about, I don't think Apple will choose to move the Mac to its own home-grown processors for a variety of reasons. A transition of OS X and all of the existing applications to an alternative instruction set would probably be more trouble than it's worth, and I'm not convinced that Apple will want to dedicate significant engineering resources to building several Mac-oriented processors for the different Mac types.
So, while I do see high dependence on Apple for high-margin PC processors as a potential risk, Intel still seems well positioned to protect its average selling prices/margins on such processors.