Apple Sells 5% of World's PCs, Makes 45% of the Profit [Chart]
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Posted April 16, 2013 at 7:22pm by iClarified
Apple sells 5% of the world's PCs but makes 45% of the industry's profit, according to data published by Asymco.
Analyst Horace Dediu writes, "The real problem for the PC vendors is not that they have such low margins–they’ve had low margins for decades. It’s that the volumes which “made up for” low margins are disappearing. Apple is not immune to a gradual erosion of Mac volumes, but they have positioned themselves for growth with devices and content commerce and services. They have essentially “escaped” PCs and indeed caused the need to escape in the first place."
Check out the charts below or hit the link for more details...
I am an Apple convert even though I make my living using Microsoft Products. My Apple computers just work, I have fewer crashes, the workmanship, screens, and keyboards are very hard to beat. There are some things I still like better about Microsoft but for my work, I use Parallels with two Windows 7 VM's and it runs flawlessly.
My wife is now a convert too, I seldom have to help her any more with her computer problems.
I am still tech support for all my family and friends.
As usual, an article like this brings out both sides and a continuation of the love/hate Apple phlegm wars.
That's not what Horace Deideu's analysis was about, even though it is an interesting point about how Apple makes the lion's share of industry margin, while having a smaller market share. Frankly, that's old news.
The most important takeaway is that PC sales industry-wide are dropping, and fast. PC assemblers such as HP, Dell or Asus have always depended on volume to make up for grocery store-level margins. If the number of PCs sold drops, this greatly impacts PC manufacturers. And Microsoft is not immune either, because it means that the number of copies of Windows drops in a material fashion.
Driving this is the disruptive changes brought about by the emergence of the iPad and secondarily other tablets, along with cloud computing. It's making computing more mobile. Where users previously relied on installed applications to do the heavy lifting, increasingly, a portable device like the iPad can do without the bulk, and let an Internet connection to a cloud processing center do the heavy processing tasks.
While this does not mean that PCs as we know them are doomed (yet), the rapid shift in consumer preferences is and will have a significant impact on the fortunes of the traditional leaders in the PC industry. Dell is going private. HP is struggling. Even Microsoft, while having diverse revenue streams, is feeling a pinch in its traditional Windows profit center, and is rapidly having to adapt by becoming a manufacturer of hardware similar to Apple.
For PC users and IT managers, the ground is changing beneath their feet. A generation of a PC establishment is rapidly being swept away by change. THAT, and not the now tired Apple/Windows phlegm wars is what this discussion should be about. Either that, or you're stubbornly fighting the last war while the rest of the world have moved on.
Apple is known for building quality products . No doubt!! But why apple is so weak in the enterprise space. Apple has always been a desktop beauty for designers and consumers. I've never seen apple behind enterprise IT systems.
I am developer with iOS, android and .NET experience. Other day, I was plotting a latitude and longitude on apple maps. The precision of plotting was so poor. Even when it comes to integration with other enterprise systems , apple libraries are so weak.
Interesting, but not shocking data. Apple has the high end of the market, it costs considerably more to make an Apple Mac, but because there is no higher-quality alternative, Apple has an ability to mark up their product. On the flipside Acer makes dirt-cheap computers, but there is only so much cost you can squeeze out at those margins. Acer relies on volumes, Apple relies on prices, and the rest fall somewhere in between. The data does seem to suggest that none of the PC makers have found a way to market a successful quality PC worth a decent margin, and I suspect that is because the lowest and highest end of the PC range all run the same operating software. In other words, no matter how well Dell or HP make the physical computer they can never achieve a +10% margin when Acer offers computers running the same software at a 1% profit margin.
Ever since switching to Apple MacBooks, and iMacs I was happily demoted as the family IT help. I no longer get driver, bluescreen, virus, and other calls at various times of day and night. Most of the issues my immediate, extended, and friends family is resolved with a reboot. In fact the first Intel MacBook (the white one) we bought is still running well for what it was needed --- internet access, email, casual photography, etc.
In the same time, I am an IT professional in business for over 20 years (since the early hay days of custom built PCs with 486DX2 chips) ... I'm not going to say Apple products are completely trouble free, but in comparison it is really a night and day... I will keep telling people to buy PC netbooks, laptops, and whatever they want... keeps me in business :) after all if everyone switched to MacBooks my bottom line would suffer tremendously.
Amazing how much hate there is for Apple products.
1. Most computers (regardless of company) are made in China, Taiwan, Korea, etc.
2. Microsoft is the real winner on the PC side because they don't have material costs (like Dell,Lenovo) replicating software is cheap. Plus they have sales on the Mac side as well (Office anyone?).
My real-world experience is that Apple price point is WELL WORTH the investment. I still have a PowerBook(2003), MacBook (2006) iMac(2008), Macbook(2007) and MBPro (2009) working in our home (we hand them down to the youngest member of the family. We have also had Windows PCs - HP, Acer, Samsung, Sony Vaio, Lenovo, and 2 Toshibas in the same period. Only one of the windows PCs is still used, the Sony Vaio 17" laptop,....and the only reason is my wife uses it to VPN to work which they had to configure. She uses her 13" inch MacBook for everything else.
The Apple products last longer, run better, are easier to troubleshoot and upgrade the software. We haven't had a need to upgrade the hardware because the specs were already robust. Apple products definitely have more value than their competitors.
I would totally agree... even thought you might get the initial sticker shock during the purchase, I am almost willing to guarantee that in the long run the "far more superior, and flexible PC" a lot are talking about will cost you just the same. From your annual Anti-virus/spyware/malware/phishing/root fee, to other issues that will cause you to shell out some pretty penny.
I recently began working for a small company that uses Mac's. I'd been a fan of Mac's ever since the early '90's when I worked for another company that was heavily Mac based. In the meantime however, I'd used Windows machines and got used to their inadequacies in certain things, and efficiencies in others. I was excited to get my new MacBook Air at this new company. After 6 months now of using it, I'm less than enamored with the thing. Yes it looks nice, trendy people think I'm cool just for having this thing, but honestly, it's not "better" in my opinion than some PC laptops I've had. Some things just seem down right stupid. I'm not saying there aren't stupid things in the Windows OS, but for all the hype and talk, for this user, the Mac isn't living up to the sales pitch. And as far as support, Apple is deplorable. I have owned a couple iPods, and an iPhone, all of which have required support and each time it was nothing more than a lesson in absolute aggravation. The MacBook Air hasn't required Apple's support yet, (we have internal company support) but I can see the day coming that it will need support and based on past experience with Apple's pathetic excuse for support, I'd rather just buy another PC and save some money.
Why does every article that mentions Apple get Hate/Love comments? Just buy what you like and get over the fact the other guy doesn't like your choice. Live and let live ;)
Not like anyone is holding you at gunpoint and forces you to buy one... I think in many cases this applies to buying cars as well. Sure you can buy a nice CLS sedan that will be the pride of your garage, but in the same time you could buy two or three other sedans that will do exactly the same thing... yes you might have a slightly different experience... but in the end changes are you will arrive at your destination just fine :) In the end, don't hate just because you can't justify spending the money.
My daughter has an Apple MacBook pro, she "needed" it for her university course. I could have bought a couple of Dell laptops for the price. The experience has shown me that if you buy from Apple then its definitely worth taking out the longest warrantee you can - she has already had every part of her MacBook pro replaced at least once. Look good, over priced, not very reliable and horrible user interface (which is odd because once they were good). They clearly have a good business model, but personally I wouldn't touch one out of choice.
Brian, first off, I have never ever heard of a university course that required a MacBook Pro. If she is a graphic design or photography major, I definitely understand her desire for using a Mac. That said, How can you have replaced every part on your machine? That is absurd and is most likely due to the user. I have had my MacBook Pro for 3 full years now and have not replaced a single component (other than upgrading the ram which I did on my own accord). For the price, this is one of the best investments I have ever made and I take very good care of it. I plan on owning this machine for another 3-5 years, before purchasing a replacement.
P.S. What are you referring to regarding User Interface?
Sorry you've had such a bad experience with your purchase. I'm not defending or accusing anyone, but it seems that perhaps she's a little rough on her laptop? I've seen an occasional failure of a component or two... but to have "every single piece of hardware replaced" is probably a little bit exaggerated.
First, Apple sells a premium product using premium components. More expensive than a low end PC, absolutely, but not against a high end Lenovo.
Pick what you need and wish to pay for. And expect that all of it will be built in China or thereabouts, whether or not it is made by Apple.
Second, it is clear that based on profit and revenue numbers, that Dell and HP have played a losers game of "volume discounting". Anyone that has worked with Dell knows that they focus on low cost, high volume and discounts. Apple sells fewer units, but at at retail list.
Fundamentally, Dell, HP and others have subsidized large enterprises' purchases of PCs for years with large discounts. Apple does not.
Which strategy is the smart one?
Ultimately, being in a commodity price war hurts the vendors. Proof of this is the respective financial performance of both Dell and HP. It is just not sustainable.
Apple is already the preferred laptop in many industries, especially for senior level execs, sales types, engineers etc. You know, the people that drive the business and make most of the company revenue and profit.
Forrester Research has released a report that Apple will sell almost $39 billion of iPads and Macs to large enterprise over next two years. 40% will be Macs. And these are going to the most senior level staff.
The reason: increased productivity. Better hardware, better support, and the ability to run Windows apps too.
For many people and companies, productivity is a far more important metric than percentage discount.
It's a simple matter of "horses for courses". If you want a cheap PC, buy a cheap PC. Just stop whining if others elect to spend a premium $ for premium quality.
I beg to differ... you clearly don't know where parts are manufactured. I love Apple hardware and the software it comes with, but if you ever opened an Apple product you'd notice that the components inside are a) made in China, or another country in Asia b) made in the same factories as components for PCs... such as FoxConn, Samsung, etc. c) clearly feature labels and other branding. These same components (for the most part) can be purchased in many electronic stores and online... nothing special about them, and in many cases can be interchanged with PCs (that is quickly changing with Apples introduction of proprietary interfaces, but nevertheless the technology inside is basically the same or at least very very similar). The word "Premium" should be used only in their final product, not the components that are used.
A lot of the revenue retention comes from the control of the software, I wonder what the hardware figures would look like if Apple had a software division booking revenue. If you then add Microsoft revenue from new PC sales to the top 5 PC makers you would see a direct correlation in line with the industry standard. Without breaking that out or at least pointing it out in the article is just bogus reporting. What this tells us is...it's better and more profitable to control the whole ecosystem. (Hp + WebOS anyone?)
Wayne - I get your point but not every PC Is sold with MS Office. I worked for one of the top PC companies and can tell you they price war the software, too. It adds some margin but nothing like Apple.
The issue I see is the PC makers have not created a mass product with high margins and now they are suffering. If the bid is 100 units or over they drop their pants in a heartbeat just to win the deal. The problem is customers know this and will continue to drive margins down. Shoot sometimes they will bid under mfg cost just to win. Then customers do the same to enterprise software and at least there is more margin there.
The bottom line is PC's have become the "cheap mass option" because they are boring. No one is going to pay $1500 for some plastic 7 pound laptop at Best Buy with 2 hour battery life.
IMO, Lenovo is the only company that is innovating the PC experience with decent products.
Congrats but it shows Apple prices are far higher than added value provided! Please compare CPU between Apple and Asus (or any other PC dealer) products and everything will become clearest in your mind...
I disagree. While in some cases it may be so, in general I have found that a fare comparison will reveal the opposite. Take, for instance, the iMac. The average user compares the CPU, the screen size, RAM, and maybe GPU. And then they stop there. They forget that a 27" for $200 they saw is half the resolution of the iMac's display, not to mention the lack of IPS technology. They forget that the iMac has built-in Wifi, bluetooth, ambient sensor, etc. And let's not forget about software. When you're comparing, please don't compare it to a PC that comes with FreeDOS or Linux installed. That intended for Piratebay users. OS aside, there's just a buttload of stuff you can do with a Mac out-of-the-box, that you need to spend $$$ to be able to do with PCs.
When Apple sell a "PC" they make the whole "thing". (Not debating where it is made). They make the O/S, the Office suite, the Photo software, the Music software, the ..... "real" PC's don't. This is NOT an Apples for Apples picture (excuse the pun). On the PC there is the overhead of adding Windows, Office, Anti-virus, Firewall, .... so the hardware is only a part of the sale. Dell get the hardware part of a sale. MS get most of the rest, along with Norton and .... you need to add at least the MS revenues to this picture to even it out a bit.
Actually the only overhead is windows. The consumer (me & you) actually pays out of pocket for office and anti virus in addition to the cost of the pc. The cost for Dell & co to install Windows does not explain that huge margin.
You are right in respect of the consumer spend, my point was that Apple are making a margin on the tin, and the software. Dell only on the tin. So there either needs to be an allowance for the soft element of the sale, or the comparison is not just hardware. MS still make $20bn a year on windows sales......
I recently had a customer session with a bank that prides itself on fair trade and employment.
They won't allow Apple products in the door. They do continual independent research of companies around the world for investment purposes and they said point blank that Apple's practices are not acceptable to their vision and mission.
When reading the numbers, connecting the dots isn't difficult.
interesting.... a bank that prides itself ? Of course we know by now what banks are up to... and I think they are the last institution on earth whose opinion I would take seriously.
Some times we pay more for a Brand and Brand perceiving value, we may not use all those features in Apple, but we buy for the Brand. Great learning for Brand building.
Apple invented nothing? What about their strict NO-DISCOUNT policy? Would explain the margins from my POV. Lenovo's list prices are high as well, but they just discount the hell out of it...
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