Joe Wilcox goes through Apple’s numbers for the quarter thoroughly (and dispassionately – something that I appreciate when it comes to numbers).
What sticks out for me is that Apple has managed a pretty astounding feat: preserving unit sales (or expanding them in many product lines) while pushing margins even higher, something that should barely be possible when the world is in the grips of the worst recession since the 1930’s. There’s been a lot of focus on the bottom-line revenue numbers, but the truth is that given the changes in the way Apple accounts (driven by a revision to the rules by the Financial Standards Accounting Board) it’s hard to really see clearly how well Apple did on that score. The best estimate is “very well, but not as well as the figures look at a glance”.
That’s why my focus in looking at these figures would be on unit sales and margins, and in both cases Apple did well – outstandingly so, in the case of its margins.
Put together unit sales on iPod and iPhone – something that’s a valid idea, I think – and they moved from 27.1 million in the equivalent quarter last year to 29.7 million units this quarter. The mix of products is high-margin items (iPhones) up, lower margin items (iPods) down. More product, at higher margin, is pretty-much all you could ask from any company at the moment. I am absolutely certain that many tech companies that are being driven to slice margins more thinly in the recession will look at Apple’s figures with a massive sense of jealousy.
As for unit sales in Macs, they seem to be broadly in line with IDC numbers, certainly for the US. In the US, IDC had estimated unit sales increase of 31%, and Apple hit 30%. Those are very good figures, but it’s worth remembering that IDC also estimated that Toshiba had upped its sales by 78% and HP by 45% in the same period. And neither Toshiba nor HP concentrate on the “cheap junk” end of the market: while their margins won’t match Apple’s, this isn’t a case of people flocking to netbooks rather than expensive PCs.
(UPDATE: But see an excellent point below by Piot on worldwide market share.)
Given these figures, don’t be surprised if Apple actually loses market share in the US this quarter. How much value you apply to market share figures is up to you – personally, I think that as long as Apple is selling enough Macs to sustain itself and keep the third-parties interested, it doesn’t really matter. The days when its market share was sinking at a worrying rate are clearly over and I doubt they are coming back.
It’s worth remembering there were many predictions that Apple’s unit sales in Macs would actually slide during a recession, as customers looked to significantly cheaper PCs or (if they were dyed in the wool Mac users) deferred purchases. That simply hasn’t happened. Without detailed, qualitative data on customers’ purchasing choices (why they’re buying what they bought) it’s hard to say for sure, but my best guess is that while Windows 7 has slowed Apple’s growth compared to the rest of the PC market, it hasn’t drawn back any of those customers who switched from Windows to Mac over the past few years.
In other words, once you’re Mac you don’t go back. The net migration from Mac to Windows which characterised the 1990’s is over. Instead, the chief characteristic is now net migration from Windows to Mac – something that Windows 7 has slowed, but not halted.
(Image by Photo by Checiàp – http://flic.kr/p/5n9bi)