Can Macs Dominate the Personal Computer Market?
Have you ever gotten the impression that Macs at one time were quite a major player in the personal computer market? Maybe way back in the dark old ages of command lines and the days of IBM as Big Brother. And then the shining light came from Apple and everyone jumped on board because its GUI was so appealing.
Kind of didn’t happen that way. In fact, the Mac has never ever been in the game for serious computer market-share. Not only has it not been in the ball-park, it has not even been in the same state. Yet quite a few people believe that Apple (with the Mac) could have and can still become the dominant player in the overall personal computer market. And I have to admit, I was on the fringes of thinking so too until I saw some market-share history.
Ars Technica late last year published an excellent piece on thehistory of personal computer market-share. Although I originally missed the article, our own esteemed colleague, Mr Seibold, used an eye-opening graph from it of those twenty years in his This Day in Apple History of 28 May.
Recently I read an article from across the Tasman in New Zealand, on the Tech Remarks Blog titled Apple Deja Vue: will they pull it off this time?
The “it” Tech Remarks refer to, is Apple achieving market dominance. The opening paragraph explains:
During the early PC era—when MS-DOS and Windows 3.1 were hot—I was an avid Apple Mac user. Apple was miles ahead of Microsoft in all areas, but of course especially from a user interface perspective. They had superior technology and the opportunity to become the dominant market player… Apple missed the “mass market” train…
Apple missed the mass market train before it even got the Mac to the station.
The Tech Remarks article is worth reading, but that opening paragraph is somewhat fanciful. As the Ars Technica graph shows, Apple had Buckley’s1 of ever being the dominant personal computer market player. And that is still the case today.
On a glance you might think the massive white spike around 1984 shows it happened once. Nope, it’s not the Mac as we’d like to hope. It’s the Commodore 64. The lowly pink line is the Mac. On it’s release the Mac commanded only 8% or so of of the computer market, only a third of what the IBM-PC clone market had, and a fifth of the Commodore C64’s market. Here was a time when, relative to the PCs, Apple had its best ever chance of dominating, yet it quickly spiraled to also-ran. By the time it recovered in the early 90s, PCs were so dominant that Macs were out of the race. (If you want to be really mischievous you could point out that the Mac’s market-share has gone backwards under both of SJ’s reigns. But that wouldn’t really be fair, as other factors contributed more so.)
Secondly notice 1990/91. A large drop in PC market share was followed soon after by a corresponding leap in Mac market-share. But the PC market quickly got back on track. Apple’s retention of the market it gained would have mostly come from decline of Commodore and Atari.
Why the PC decline though? One thing that happened in 1990 was the release of Windows 3.0. It was a giant leap forward on Windows 2 and it did signal the real beginning of the GUI desktop on PCs. So why the slump? One reason might have been that people then, for the first time, were choosing between Windows and Macs and so a lot seeing the Mac OS being significantly better, chose Macs. Also it’s possible PC buyers put off buying new PCs until Windows had stabilized, which occurred with Windows 3.1 in 1992.
Also, in 1992 Apple released the first PowerBook. This was the machine credited with kicking off the modern era in laptops, and at one time had 40% of the laptop market-share. That more than anything would account for Apple’s sudden upturn. 1991 was also the year of the introduction of the widely acclaimed new Mac OS, System 7, which would also have boosted Mac sales—especially if buyers compared the Windows 3.0 offering (which really was still a glorified menuing system).
Even though those fluctuations again highlight how poorly the Mac was selling compared to PCs, it does bode well for Apple today. If Vista 1.0 is seriously flawed in any way, whether it’s price, performance, requirements or functionality—people may look at the Mac as an alternative. But as the graph shows, Apple could triple its market-share, which would be fantastic for Apple—but it would still be just a blip on the Windows PC market-share. Of course, if many of those “switchers” ran Windows with Bootcamp, it would affect Windows market-share even less. Should Macs be counted in the PC’s market-share now?
It also appears that the Mac’s market-share really took a dive around the time Windows ‘98 came out. Other factors would have been at play there, but the regular correlation in market-share changes between Microsoft and Apple OS releases does appear to be a factor. With Vista on the horizon, Apple could be about to experience another market-share leap.
But market dominance? Buckley’s.
Next week I’ll discuss the home market, whether Apple can make inroads there and why the Mac is a genuine option for buyers in that market.
1 From the Online Macquarie Dictionary of Australian Slang:
Buckley’s: phrase 1. to have Buckley’s (chance), to have no chance at all. 2. to have two chances - Buckley’s and none, (Jocular) to have no chance at all. [def 1 possibly referring to a famous escaped convict William Buckley; def 2 a pun on Buckley and Nunn, a Melbourne store]
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Hey, what about the Apple II? It was a major player well into the nineties, with a significant market share. In fact for a while, the best selling Mac was the LC, with Apple II emulator cards attached.
When the IBM PC first came out Apple never had a chance. They just didn’t have the track record, credibility, or gravitas, if you please, that would convince corporations to take a flyer on equipping their offices with Apples instead of I. B. M. The Apple II was still thought of as this nice computer from this cute little company that’s great for schools and hobbyists maybe but certainly not for serious business computing. And what’s with the fruit? Would you buy a car from the Grapefruit Motor Corporation?
‘84 with the Mac was the One Big Chance. With probably the most successful single-showing tv ad of all time grabbing everyone’s attention. But what did Apple do? They got greedy and saddled the MacIntosh with an insanely high price. People looked into the Mac and recoiled at the price tag.
Oh yeah they were making money hand over fist but every year their market share would tick down and they’d stubbornly hang on to their premium pricing. What were they thinking as they watched their market share spiral down? Did they actually aspire to be a niche player?
I think this decision to go for profit$ rather than market share when the Mac was introduced was the single biggest blunder Apple has ever committed. Not the Lisa, not the Apple III, not the Newton, not the clone program, not anything else. Do we lay this blunder on Steve Jobs’ feet or John Sculley’s?
Anyway, I think Apple now has the credibility (not to mention creativity and innovativeness) to mount a serious market share campaign. It’s just going to be a hardscrabble knock-down fight where victories are measured in fractions of a percentage point rather than by leaps and bounds.
It’s sad. An opportunity like the Mac in ‘84 might never ever come again.
One thing I would like to see is how Apple’s numbers stack up compared to HP’s or Dell or Acer, etc. To me, it is misleading to compare Apple and MS until MS starts building it’s own hardware or Apple starts licensing its OS.
Unless you really can’t afford it, or you are a serious gamer, the Mac is already by far the best choice for a home user. Macs are easy to set up, easy to use, don’t get viruses (yet) and ship with some really useful software. I think we will see a big spike in Mac sales to home users in the next 12 months. But for business? Well, Apple don’t even support their products in a Windows environment, and there are too many missing pieces of the puzzle to make a Mac viable for most business users… Also, business users tend to be more ruthless about price.
Microsoft is transfixed by Vista’s problems, leaving Dell and HP unable to do anything developmentally to compete with Apple until Microsoft get their act together. Which leaves the field very open for Apple to build on the iLife / Front Row offering.
Microsoft have reached their desktop apogee. They are now saddled with a huge expensive enterprise (Microsoft Corp) and a very creaky old operating system. They face huge competition from open systems, especially in Europe, not to mention thin client technology…
Nimble, capable, Apple is on a different trajectory - doing their own thing in a market they are rapidly claming as their own. Let’s see how they get on - but a doubling of market share for Mac in the next 12 months is not beyond the bounds of possibility - remember they are coming off such a low base that only a very small number of windows users has to move to Mac to cause Apple’s marketshare to explode…
The Mac’s single biggest enemy in the OS marketshare wars (which Mac users are obsessed with while denying it matters at all) is PRICE.
And yes, we can spin the numbers and pretend like TCO somehow balances it all out, but when a consumer is looking at the price sticker and sees an eMachine for $300 that does what they need it to do, then the Mac loses. This happens at every level Apple competes except maybe the iBook/Macbook where Apple’s prices are starting to look quite fetching.
Until they lower their prices to compete, which they won’t do, they are going to be a niche market of mostly premium-end computers.
The trick is to be okay with that. I know I am.
I believe that at several times Apple was selling more in $ than the clone manufacturers, because the clone market was divided among so many companies.
In the mid and late ‘80s, when I would advocate a Mac purchase, the response I got from many was - “Will it run Lotus 123 and WordStar (or WordPerfect)?” - “No,” I’d reply, “but there are equivalent programs for the Mac.” “Oh, but I’d have to buy those, I’m just going to copy the programs I need from the office.”
So, my hypothesis (untestable, I’m afraid) is that software piracy gave the PC clones their initial boost into the home market.
Secretly, I am certain, that Steve had his Plan laid out back in 1985 a year after the Macintosh was introduce but unfortunate things happened to His Coolness in that Mr. Sculley possessed more balls and bravado to relegate him to his Apple kingdom - in his own corner office.
So it was from several bios and commentaries I have read that Mr. Sculley was the culprit in keeping the Mac price artificially high for profits’ sake. Initially, he wanted a higher margin to pay for the expensive launch marketing a year earlier. But profits got too sweet for Sculley to let go. The choice for Sculley was to “lateral promote” Steve with a title but no power whatsoever.
As to the question asking if the Mac can ever ragain past riches, I believe that’s very possible with today’s Intel architecture in place.
And about the Mac dominating the PC market? That will take a miracle. Imagine 100 million user-turnover ratio in a few years? Say the market doubles to 200 million PCs shipped a year. That’s a lot of M$ junkies to convert. Businesses will stick with M$ for as long as the evil empire keeps pumping out versions after versions of Window$ (defective or not, virus-laden or not, or productivity-deficient or not).
So it was from several bios and commentaries I have read that Mr. Sculley was the culprit in keeping the Mac price artificially high for profits’ sake.
The price is still too high (if one expects Apple to significantly impact marketshare in any way) and Job$ has been in charge for nigh on a decade. They’re not coming down because Job$ doesn’t want them to.
The price is still too high (if one expects Apple to significantly impact marketshare in any way) and Job$ has been in charge for nigh on a decade. They’re not coming down because Job$ doesn’t want them to.
Exactly, and this is what I don’t get. Jobs himself told Newsweek that artificially high prices were the reason for the mac’s low marketshare:
http://daringfireball.net/2006/03/ipod_juggernaut
How could he be making the same mistake again? I mean, he clearly isn’t with the iPod (and possible the new portables), but overall the prices are still way too high - and Jobs knows it. Confusing.
BTW, nobody has mentioned Apple’s god-awful developer support, which is equally to blame. This is one where Apple clearly hasn’t learned the lesson from, since each new version of OSX slightly breaks backwards compatibility. There’s no excuse for the price thing, though.
Quite to the contrary, todays most extravagant consumer Mac (Macbook Pro) can be had for around $2500. Considering inflation over 20 years that same amount was worth less than $1500! Wow! What a bargain! Going further, a Macbook today cost $1100 which translates in 1985 dollars to about $600. That is a steal!
Way back in 1985 the lowest priced Apple (Moto 68K-based) was the Macintosh weighing in at $2500 ($4400 in 2005). The Lisa and Mac XL both too fat and heavy at $9995 were so pricey even the big companies ignored them. And so the bulky PCs of the past got their chance to stardom. And the Lisa/Mac XL went to the dumps (literally somewhere in Utah).
I agree the current Mac price points are a bit high compared to generic Dell PCs. But let me ask, how many of you actually open those nice, shiny cases? Do you even recognize who makes those MBs? How ‘bout those HDs and optical drives? No? I have a PC consulting biz on the side and I do this almost daily. Those components are crap, worthless pieces of junk. You are better off building your own box from brand name parts than having a nice looking box with junk parts.
That’s what makes the competition so cheap. I doubt you’d want to buy a Mac with such parts. I have been advocating a low-end at $599-799. That should be enough $$$ to keep Apple from throwing us lemons that will be obsolete in 6-12 months (give or take MTBF of those junk parts).
I agree the current Mac price points are a bit high compared to generic Dell PCs. But let me ask, how many of you actually open those nice, shiny cases?
My brother had a Dell laptop for five years. He finally sold it to a friend of ours a year ago and it still works just fine. And I have had two eMachines (yes, eMachines): a desktop for 3 years and a laptop for 2, and both work great. I’ve upgraded them, to be sure, but the TCO of my desktop is still less than even my Mac Mini.
You can come up with all the reasons in the world for why you think Macs are priced high, but the simple fact is that they are priced high because Job$ regards his products as premium-end products and prices them accordingly.
Robotech,
I’m not getting your inflation comparison - of course computers are cheap today relative to 20 years ago. But moving along…
The price points aren’t “a bit high,” they are soaring (as Colbert would say, soaring like the Hindenburg!). I wonder if anyone can find Apple’s profit margins - I’m especially interested in the mac mini. That alone will prove whether their high prices are due to good components or simply due to (bad) choice.
One anecdote: I was speaking with my mom about possibly replacing our old PCs with a few mac minis. After telling her the price (over $600 each at the very least), she countered that Best Buy is selling eMachines for $200. I couldn’t argue with that. My mom doesn’t care that the “components are crap” or that they have higher TCO. If Apple wants my mom’s purchase, they should slim their margins and offer the mac mini at 65-75% of the current price (yes, arbitrary numbers).
The proper price comparison for Apple is Sony or IBM/Lenovo. Not Dell or -gasp- eMachines.
The PC market is not monolithic. It is idiotic to expect Apple to compete for eMachines’ demographic. I don’t think Steve Jobs has any ambitions of penetrating that tech-hick market and the customer support nightmare that goes with it.
BTAIM, yes Apple could stand to lower their prices a little more I think but they might be wary about the supply end of things. You can’t just ramp up production overnight and not expect major quality and production schedule glitches. We all keep focusing on the demand side, does anybody know what Apple’s contract manufacturers’ capacity utilization numbers are right now?
Yes, eMachines are lovely little devices and I’d love to have one next to my HD panel.
Yet Moms and Grandmas with a PC-hardware-genius relative (that they can count on to help them) are the exception not the rule. Your individual MTBF (TCO) with your brand name or generic PC can vary. To counter that, I still have a working Performa 6400 from, oh 1996, and a bondi-blue iMac circa 1998. No MTBF to mention there. Obsolescense happens very slowly on a Mac. Just a thought, will your machine really run Vista? My iMac G4 will run Leopard OSX. Hmmmm. One of those we don’t consider because most get blinded by price.
Apple is getting their act together on this front - PRICE. Feel free to make side-by-side comparisons of the new Macbook with any Core Duo notebooks out there. The price difference is not what it was a generation ago with the iBook. You can finally compare Apples-to-apples.
If you mention that it will run XP/Vista along with OSX and the choice becomes very obvious. Now, it’s up to marketing to say it is so. Best wishes for them.
If you are very interested in calculating the effects of “inflation” throughout the years, Google this: “inflation calculator”. Have fun.
tundraboy,
Here’s the difference: Sony and Lenovo can sell only high-end stuff, because the low-end market for Windows PCs is already saturated. But Apple? Apple’s the only hardware maker for OSX, so when it decides not to enter the low end, the entire OSX platform doesn’t exist on the low end.
I don’t care if the low end isn’t profitable. I don’t care if it’s too big or a customer support nightmare. Apple should go after it even if they lose money in the process (assuming its a manageable loss). The value of an operating system is dependent on the network effect - the more people who use it, the better. Gates recognized this from the very beginning.
So if Apple wants to sell more high-end computers (read: profitable ones), it has to lower its prices in order to spread its platform as widely as possible, including to the unprofitable low end of the market. Oh, and they also need to improve their developer support, but that’s another discussion.