Mac sales slip in latest Apple quarterly results - what's it mean?

Mac sales slip in latest Apple quarterly results - what's it mean?

Apple reported its third fiscal quarter earnings for its FY2013 today, and the Mac sales numbers aren't great: Year over year the number of Macs sold dropped 7 percent, from 4.02 million to 3.75 million. What's this mean for Apple and for the future of the Mac?

For the moment, probably very little. Because any way you slice it, the Mac is responsible for only a small portion of Apple's overall revenue. For the quarter, Apple reported $35.3 billion in revenue. Of that, less than $5 billion was from the sale of Macs - less than 15 percent. The Mac, once Apple's dominant business, truly is a sideline interest compared to the iOS juggernaut.

Mac Sales - Q3 11 to Q3 13

The seven percent drop is further off than market research firm NPD had expected - they'd predicted a more modest five percent drop in Mac sales. What's causing the slowdown? It's certainly reflective of weakening PC demand all together: Gartner reported a 10.9 percent contraction for the second calendar quarter of 2013 (the same time period Apple's Q3 happens in). IDC saw the steepest drop ever in the same calendar quarter: in April, IDC reported a 13.9 percent decline in PC revenue.

So by those measures, Apple is still doing better than the rest of the industry. But that doesn't mean Apple shouldn't be concerned about this downward trend. As you can see from the chart above, Apple's Mac sales are the worst they've been in a while.

Blame it on the iPad

Apple isn't immune to the market reality that more PC manufacturers are facing every day: fewer people are buying computers, including Macs because more are turning to tablets like the iPad. The phenomenon is known as "cannibalization."

iPad mini

And from Tim Cook's perspective, cannibalization represents "a huge opportunity" for Apple. At least, that's what he's gone on the record as saying. He believes the iPad gives Apple "the mother of all opportunities" to wrest people's hearts and minds away from Windows-based PCs and into the iPad. That, he says, will lead people eventually to buying a Mac to replace an aging PC.

But more than that, Cook isn't concerned about cannibalization of Apple's existing Mac user base. He's said previously that some Apple customers may be choosing the iPad over the Mac, but a lot more are choosing an iPad over a Windows PC. And Cook feels that's one in the win column for Apple.

Don't blame it on the MacBook Air

In mid-June, Apple announced and immediately began shipping a refreshed MacBook Air. It's the first Mac in Apple's product line to use Intel's fourth-generation Core "Haswell" microprocessor, which provides much better battery life and distinctly better graphics performance than what Apple used before.

And it turns out that the new MacBook Air has been enormously successful: people are buying it in droves. Outside of Apple retail stores and a few big box retailers with the clout to push Apple's inventory their own way, many of Apple's retail channel partners have had trouble getting as many of the refreshed laptops as they can sell, either directly from Apple or through Apple's network of distributors.

Apple exited the June quarter with a lot of customer demand for the updated MacBook Air. And remember, Apple only released the refreshed MacBook Air in mid-June: its sales only contributed to about three weeks' worth of revenue for Apple's entire quarter.

What can Apple do to turn it around?

I'm not sure that Apple can do anything to turn it around. I'm not sure they need to. Wall Street analysts don't really pay that much attention to the Mac sales numbers anyway. But the Mac is and always will be Apple's spiritual home - it's the technology that iOS was born from, and Apple continues to refine the Mac operating system and the hardware that runs it. What's more, they continue to innovate. Look no further than the forthcoming Mac Pro as an example of that.

The New Mac Pro

So even if Mac sales remain tepid, as I expect they will, there's no reason to be glum. We just have to acknowledge and respect that iOS is the king of the hill these days. As long as Apple can make money producing Macs - and they certainly are - they'll keep making them.

Steve Jobs' vision of a truly "Post PC world" is still a way off. Though if this trend continues, the end of the PC may be coming sooner than many of us expected.

Peter Cohen

Managing Editor of iMore, Mac and gaming specialist and all-around technologist. Follow him on Twitter @flargh

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Mac sales slip in latest Apple quarterly results - what's it mean?

23 Comments

PC sales are down too - even more than Mac - so all in all, its a slow economy, and Apple did better compared to PCs.

It's also a slow global economy. The US has been in recovery mode for a while. Unemployment is down in most areas since 2008. But many places in the world are still reeling. Regardless point is Corporate tech spending is expensive and it's one of the first things to stop when you need to save money. Many a company has computers for desktop publishing and the reality is you can type a letter, legal brief, memo, create a spreadsheet, or powerpoint just as good on an an old computer as a new one. Why pay to update an entire company to a new version of software, a new os, etc? Can you imagine how many computers that is for say GE, or Coca Cola, or Exxon, etc. And many companies are dependant on one software written for a specific OS so it's not a simple choice. I worked at a company that wrote it's own proprietary software to do analysis. It wasn't a software company but it had it's one application for one job. It was written for Windows XP (or something i forget). But it wasn't Vista. So they refused to update the OS because they couldn't guarantee it could work the same under Vista. they eventually got it going but by that time they were on to Windows 7 and they updated everyone. but still it was a big choice because they had to change two floors of machines, and for a small company that was a big expense. And when you consider that large parts of Europe are belt tightening, Japan, etc. 5 Years ago everyone was screaming about China's rate of growth and how they were the only country growing in a bad economy. Even China has hit a rut now. You're gonna have some slow down.

Lenovo is the only PC maker growing in the post PC world. Apple, Dell, HP, etc are all twisting in the wind when it comes to the PC.

"The seven percent drop is further off than market research firm NPD had expected - they'd predicted a more modest five percent drop in Mac sales." - NPD only tracks US sales, while Apple reports WW sales.

It likely means that Apple will continue to devote the bulk of the resources to iOS devices rather than computers, meaning we will keep seeing long and/or unimpressive refresh cycles for the Mac -- unfortunate for those of us who want to live mostly on their computers as opposed to their devices.

But Apple foresaw this eventuality, and decided that if anybody was going to eat their (computer sales) lunch, it was going to be them, so it does not mean anything dire for them as a company.

How are Mac Refresh cycles markedly longer or less impressive than other PC makers. Baring a few exceptions (MacPro), Apple refreshes the Mac lineup every year.

The Mac may not be the most profitable part of their company, but it's not going anywhere. For now anyways, there is no iOS development without the Mac.

Yes, I am speaking mostly of the Mac Pro, which is where the engineering muscle should be flexed as the showcase product. Instead, the MacPro languished for several *years* -- an eternity in computer years before getting a refresh announced, which is a) still vaporware, and b) meeting with puzzled, tepid response from a large slice of the current customers. The iMacs and Macbooks get refreshed do get refreshed regularly, though they are not as aggressive with chipsets as some of the PC makers.

And I never said they were going anywhere -- just that they will likely keep their resource distribution heavily in favor of iOS.

Erm, the people who bought a Mac last year are different people who bought one this year. So the fact that many millions more people bought a new Mac this Quarter is good news. The people who bought last year still own theirs, and next year a whole new 'several million' will buy theirs. Every 3-6 years people might replace theirs at the same time as several million 1st time buyers get theirs, and the numbers might go a little higher. But the post iPhone Apple-gasm hasn't matured enough to tell what people's upgrade cycles truly are yet. Comparing Mac year-on-year sales to Phone year-on-year sales is a folly. Does this article actually MEAN anything?

The "first time Mac buyers" trend isn't new at all. Since Apple's been selling computers in its own retail stores, that number's hovered within a few points of 50 percent.

We expect negative growth due to market and iPad cannabalization , but this quarter was also hurt by deferred sales as most expected a haswell MacBook Pro with the Air, when that arrives these deferred sales will arrive and boost numbers nicely.

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I think the kicker is that Apple didn't release updates for their top selling MBP lineup yet. They're running behind in the refresh cycle and people are waiting to see what's next. I don't think they'd be delaying like this unless there were some sort of production problem, or waiting for some technology that isn't ready yet. They're hurting during the back-to-school season, so that's really going to hurt compared to their historic numbers.

Also, people are waiting for updates to the MBPs, especially the retinas, as well as a possible retina iMac and display, not to mention the Mac Pro. This is probably the worst time to buy a Mac, so it shouldn't be any surprise that sales are down.

The simple fact is that most of the Mac lineup is still waiting to be refreshed. The only "2013" machine available today is the MacBookAir. It's going to be a busy fall, and I think we'll see things level out as machines get turned over.

Overall though, it's clear that traditional PC sales have reached their peak, as people who perhaps never really needed a PC now have more options. PCs aren't going away, but they're no longer necessary for ALL tasks and by ALL people. But I think this downswing will have a long tail, and it will be interesting to see if Macs can continue to shrink slower than the rest of the industry, thereby seeing their marketshare of PCs increase while at the same time largely dominating the new sectors.

I think the current Mac lineup is not that great for relatively price-sensitive people like me who expect to use it at least 5 years. With "price-sensitive", I'm not talking about $300 notebooks, but somewhere around $1000.

If you want to purchase a MacBook (Retina or Air) that won't be obsolete soon (with 4 gig of RAM and 128 gig hard disk), you have to bypass the base models and take the version with higher RAM, larger SSD (at least 256, better 512 gig). That brings you to quickly near $2000.

The standard MBP is great concerning expandibility (you can start with the smallest configuration and make smaller upgrades during its lifetime), but has a lower resolution than the Air and this crappy reflective glass. It feels like a neglected product and might even not get a Haswell upgrade at all.

At the moment, Apple does not meet my needs at all so I still use my white late 2007 Macbook at home though it's not a good experience anymore. I might guess that I'm not alone with this problem.

IMHO it's nothing to do with the iPad/tablet or post PC/Mac era, it's simply the global economy, I bet if you looked into the sale trends of any 'luxury' item the downwards trend would be the same, TV's or Surround sound systems for example. People generally have less money then they did last year or the year before, if they can eek out their current 'aging' hardware for another quarter or even year then they will. Once we see the economy settle and start to grow then sales of Mac/Pc's and everything else will grow as well. Blame it on the economy not another device.

"That, he says, will lead people eventually to buying a Mac to replace an aging PC."

I'm one of those people and I'm loving my macbookpro everyday

I am one of those people too, also I've installed Win 8 with bootcamp on my mcbook pro retina and I honestly don't think I will ever need to switch to a PC machine, ever..

I work most weekends at an Apple specialist and that's a big selling point that makes it easier to sell the Mac to first-time customers. I explain to them that they can very easily install Windows on their Mac, but it's very difficult to do the reverse without jumping through hoops (most customers aren't interested in going through the process of making a "Hackintosh").

Near as I can tell, few customers actually bother with Boot Camp or virtualization software unless work demands PC software (MS Access is a particular offender; specialized financial software is another; a lot of our customers work for banks and investment firms). But many appreciate the comfort of knowing they can install Windows if they need to - it makes the transition easier for them to get their heads around.

Honestly i'm enjoying OS X experience and the only reason i put windows 8 on that machine is to play games like Dead Space 3 or Metro Last light, these games look awesome on retina display. for everything else I switch to OS X, it's a shame though these games don't exist on Mac... and yeah, it was a breeze to put win 8 on it.

The so called "end of the PC" has been lamented about since 1996 and it still hasn't happened, particularly in businesses, where no one is going to find an iPad placed on their desk today, to replace the PC that was there yesterday. Macs aren't going anywhere any time soon, unless Apple wants to lose a ton of money for no reason, which would be really stupid. Sales are down everywhere, due to the economy, yet I still see Macbook Airs and Macbook Pros on desks of managers, where I work. I don't expect that to change any time soon.