Q3 2018: Really low Mac sales while PC sales remained constant

_ Apple’s numbers were 5.3M vs. the 4.9M estimate. In other words they shipped 1.6% LESS than the year ago quarter_

Yes, the Gartner estimates were – as noted – unreliable.

And Mac revenues were up 3%. So, pretty stable overall, and certainly not the “wither[ing]” you postulated.

And this is in the context of a “stagnant” PC market (quote from the article you cited at the top of the thread).

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The Gartner estimates were within 8%. Not bad for an estimate, especially because the conclusion was right: Mac units dropped.The fact that it is an estimate and later gets corrected is by the way something the originally quoted article actually spells out very clearly. The same uncertainty BTW pertains to their estimate for Lenovo’s numbers for example. Lenovo, who in the same quarter had GROWTH of 11% I might remind you. Or HP’s growth at 6% — that would be 4 times in growth what Apple suffered in loss. All in the very same quarter.

But these estimate, well, get used to it. Apple just told us they won’t show units anymore. All you’ll get is revenue. Which might be good enough for shareholders, but to me as a Mac user and buyer totally irrelevant. Actually, falling units and rising revenue just means Apple has gotten fewer people to give them more money. I might take that as sign for their great marketing, but definitely not as a good sign for macOS or Mac.

Apple always liked to brag about how they sold more while the PC market was stagnant. Well this “stagnant” PC market just produced 11% growth for Lenovo and 6% for HP, while Apple shipped fewer in Macs in the very same quarter. This is the whole point of my thread. You don’t get to pick and chose arguments just so you can shill for one side or the other. The metric stands. Apple left many Mac lines to wither (Mac Pro almost 5 years now and still waiting, Mac mini 4 years, MB and iMac nothing for over 17 months and also still waiting, etc.) and IMHO that came back to hit them over the head this quarter.

Lets just hope they learned from this and re-develop commitment to Mac and macOS. I also note Mac is now making them about twice as much money as iPad. So if you have to neglect something… :wink:

Simon

    November 2

Not really. Nothing really new. Apple’s numbers were 5.3M vs. the 4.9M estimate.

This is outrageously successful in a market where just about every other manufacturer is cutting prices because of price competition.

In other words they shipped 1.6% LESS than the year ago quarter. Meanwhile several PC makers had really good quarters, Lenovo actually had double-digit growth in the very same period.

This sounded totally off the mark from what I’ve been reading for years. So I did a quick search and found a more realistic analysis of a set of numbers from Gartner last year.

Lenovo Falls To No. 4 In U.S. PC Market Behind Apple

Lenovo’s U.S. PC shipments fell more than 25 percent in the third quarter, the steepest year-over-year decline since its 2005 acquisition of IBM’s PC business.

“Lenovo’s decline not only benefitted HP Inc. and Dell, but it also allowed Apple to overtake it as the third-largest PC firm in the U.S. market. Moreover, while all of the top manufacturers saw shipment declines in the quarter, none were nearly as deep as Lenovo’s, and HP Inc., Dell and Apple all registered at least nominal share gains while Lenovo lost share, according to Gartner.”

Best Buy is selling brand new Lenovo laptops in the $150.00 range, and even their most expensive models aren’t raking in the profits of MacBooks and Pros:

https://www.bestbuy.com/site/lenovo/lenovo-laptops/pcmcat230600050001.c?id=pcmcat230600050001&sp=%2Bcurrentprice%20skuidsaas

Keep in mind that Apple products are available in fewer countries than Lenovo, which also affects sales and shipments. The entire article is well worth reading, and it is focused on hard numbers rather than estimates.

To me not really a surprise (and all already mentioned in the very first post). Apple has neglected the Mac, while PC manufacturers kept improving their notebooks. So yeah, nothing really new.

No matter how much PC manufacturers keep improving their hardware, they are still running Windows or Android software and are locked into a price war with literally hundreds of thousands, if not millions, of models of other PCs that are extremely less profitable than Macs. You want to use Mac OS for any reason, you gotta buy a Mac.

Simon

    November 2

The Gartner estimates were within 8%. Not bad for an estimate, especially because the conclusion was right: Mac units dropped.

8% is off the mark. It is not as bad as 10%, but it’s certainly not at all good. And for the last time, for real, Shipments are nothing resembling profitability. Revenues and average selling prices are. There are other factors to consider down the road. Amazon, who is the largest seller of PCs in the US, is doing extremely well with their house brand Fire tablets and TV sticks:

https://www.theverge.com/2018/2/6/16981504/amazon-tablet-fire-2017-black-friday-cyber-monday

Rumors have been floating around for quite a while that they could be getting into convertible laptops and possibly monitors. This could really drive down PC prices even more. Because Amazon’s ad sales network is growing exponentially (they are #3 behind Facebook and Google), this makes a lot of sense. They won’t even have to make much, if any, profit off of hardware sales to rake in the billions.

The fact that it is an estimate and later gets corrected is by the way something the originally quoted article actually spells out very clearly. The same uncertainty BTW pertains to their estimate for Lenovo’s numbers for example. Lenovo, who in the same quarter had GROWTH of 11% I might remind you. Or HP’s growth at 6% — that would be 4 times in growth what Apple suffered in loss. All in the very same quarter.

For the 4th quarter, Apple had the best revenue growth and average selling price. Growth of whatever shipments is not a relevant comparison as it is possible that few, or even none of the unit sales were profitable.

But these estimate, well, get used to it. Apple just told us they won’t show units anymore. All you’ll get is revenue.

Mestri explained what every analyst knows and acknowledges:

“Unit sales are not necessarily representative of underlying strength of our business. Revenue and net income, stock price, etc, over past 3 years, no correlation to unit sales in any given period… As you know well, our product ranges for all the major product categories have become wider over time… therefore, a unit of sale is less relevant for us at this point compared to the past because we have a much wider lineup… as I know that you’re aware, our top competitors in smartphones and tablets and computers do not provide quarterly unit sales either… nevertheless, we know this is something of interest, and we believe when providing qualitative commentary is necessary, we will.”

One more thing…Lenovo was $126.78 million in the red in their fiscal 2017/18, “as costs are higher than revenue growth.” and “the company’s PC and smart devices business posted a 2 percent drop in profit for the year despite an 8 percent growth in revenue.”

https://www.firstpost.com/tech/news-analysis/lenovo-is-suffering-its-biggest-annual-loss-since-2009-as-costs-are-higher-than-revenue-growth-4481071.html

Their annual results over the past 13 years are so far out of Apple’s ballpark they might as well be on Pluto:

https://www.statista.com/statistics/233038/net-profit-of-lenovo/

Josh posted a very nice video detailing the difficulty the Mac faces over in this thread.

My thoughts on this are more in line with this article fromTheStreet:

Why Apple’s Smart To Not Report iPhone Sales Any More

As the smartphone and tablet markets contend with declining sales, Apple seems eager to signal that its growth strategy is no longer tied to unit shipments.

"As its just-announced iPad/Mac refresh demonstrates, the iPhone is by no means the only product line for which Apple is pursuing an ASP growth strategy. Apple’s latest iPad Pros, MacBook Air and Mac Mini all feature meaningfully higher starting prices than their predecessors. Even the company’s latest Apple Pencil stylus (it’s magnetic and supports wireless charging and gesture controls) comes with a price bump.

Meanwhile, as Apple’s iPhone revenue grew 22% over the last two fiscal years, its Services segment revenue grew 53% to $37.2 billion. The fact that the iPhone installed base has been (in spite of limited unit sales growth) growing at a double-digit clip has helped, and so has the momentum for services revenue streams such as the App Store, Apple Music, Apple Pay and iCloud Storage, as well as ad revenue-sharing payments from Alphabet/Google (GOOGL - Get Report) .

Apple’s “Other Products” segment, which covers a slew of products for which unit sales haven’t been shared, has also been doing well. Its revenue has risen 57% over the last two fiscal years to $17.4 billion, thanks in large part to Apple Watch and AirPods demand.

For all of these reasons, there’s some truth to CFO Luca Maestri’s assertion (made on Apple’s Thursday earnings call) that the company’s quarterly unit sales numbers don’t necessarily reflect the underlying strength of Apple’s business. And the divergence could be even greater in the future, should Services and Other Products revenue keep growing strongly. Or if – as some speculate the company will eventually do – Apple rolls out subscription services that bundle scheduled hardware upgrades with services such as Apple Music, iCloud storage and AppleCare support."

The whole article is a worthwhile read:

https://www.thestreet.com/technology/apple-s-disclosure-plans-make-more-sense-after-looking-at-industry-stats-14768020

Apple can’t wait to shout from the rooftops when things are “fastest selling iPhone ever” but when the sales are flat, let’s hide all the numbers I guess.

Talking about unit sales is no longer easy for Apple, so it will stop. What will be too tough for the company to disclose to its investors next?

_ The Gartner estimates were within 8%. Not bad for an estimate_

The estimates were wrong, and you based your entire analysis on the substantial drop they supposedly showed. Well, that drop didn’t exist. There was a drop in unit sales – a slight drop – but revenues actually went up. That really doesn’t fit your narrative.

“Narrative”? Really? Can we not make this sound like some kind of personal dispute?

Apple shouted from the rooftops when they sold more Macs than PCs. Now we just saw Apple sell fewer Macs while during the same quarter several PC manufacturers sold many more units. It’s the same metric. There is no narrative. This is not politics. It’s applying the same metric and not choosing which side to come down on depending on which brand had the plus sign and which had the minus sign in front of their numbers.

Apple has always made more revenue and that’s great if you’re one of their shareholders. But Apple making more revenue does not make the Mac user experience any better. Hence, their revenue is not was this thread was ever about. This thread was about Mac users and Mac buyers, and what has changed as of lately for them. Apple wasn’t able to maintain number of Macs sold (their numbers, not Gartner’s, not mine)—obviously fewer people wanted to buy a new Mac. In the past it had been suggested that that was because all manufacturers were selling fewer computers. But as we just witnessed, that is not the case. Apple sold fewer units while their competitors sold more. To somebody who’s interested in using Macs (as opposed to making money off Apple shares) that’s a bad sign. And that is what this thread is about. You are of course perfectly free to start your own to discuss other aspects.

Simon

    November 3

Apple can’t wait to shout from the rooftops when things are “fastest selling iPhone ever” but when the sales are flat, let’s hide all the numbers I guess.

Facebook doesn’t break out Instagram, Messenger, etc. Google doesn’t break out YouTube, Drive, etc., and it recently lumped together reporting a bunch of its ad sales operations. Amazon just announced they will just be posting one number for all its ad sales operations. They only recently broke out Kindle and Fire sales when Barnes & Noble and others abandoned the eReader business and stockholders, the press, board members needed reassurance about it. It turns out that iPad has been creaming them in unit sales and profits, which doesn’t matter to Amazon because they pretty much give them away because they pump billions into to their retail and ad sales businesses. It’s a totally different strategy than Apple, Samsung, etc.

“Tablet sales for Q4 of last year are out, and they tell an interesting story about Amazon superseding Samsung during the quarter with tremendous growth due to large discounts, according to an IDC report. While iPads were still far and away the most popular tablets among consumers last year, with the 9.7-inch iPad and two sizes of the iPad Pro selling a lot of units, Amazon showed the most growth among the top five tablet companies.”

https://www.theverge.com/2018/2/6/16981504/amazon-tablet-fire-2017-black-friday-cyber-monday

Talking about unit sales is no longer easy for Apple, so it will stop. What will be too tough for the company to disclose to its investors next?

If the company’s profits are growing and they are delivering big dividends and stock prices are rising (preferably) or stable, then investors will be grinning ear to ear all the way to the bank. Apple’s stock turned down slightly after the earnings because of guidance that that sales will be affected by the mega tariff increases.

David is correct here. In marketing, the margin of error is generally +/- 3%. 8% isn’t 10%, but it’s certainly not good.

Simon wrote: “obviously fewer people wanted to buy a new Mac”

That could well change (for a while) with the new Air and Mini. People don’t like paying full price for years old specs, and these days there’s no reason to since for most people, the old hardware still works fine for what they need to do. The Mini is a mixed bag, because it’s much more expensive for the casual user, but for people who do want some horsepower but don’t need a pro it’s quite a nice machine, and not much more expensive than a used 2011 Mini. Some will hold off to see what the new Pro is like, but I expect that it’s going to be vastly expensive, so the Mini will fill that gap. The Air is one of the most popular laptops among my users, and they’ll likely jump at it as soon as their budgets allow them to.

I suspect that one reason for the price increases is that people keeping their hardware for five to seven years instead of two to four is the new normal. (Though their price for SSD upgrades is extortionate, especially since SSD prices are sliding down pretty fast right now.)

One further complication on comparative sales figures: Many PC companies state units shipped. These are shipped to stores, but not necessarily ever sold; historically there have been some huge gaps between those numbers. Apple has always (afaik) reported actual sales. I personally don’t care about sales figures. I only care that a company makes stuff I want to buy, and (sometimes) probably isn’t going to go out of business immediately after I buy it.

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Simon

    November 4

Apple shouted from the rooftops when they sold more Macs than PCs.

I don’t ever remember reading or hearing anything about Macs having more unit sales than PCs, even for one quarter. Please provide a respected source for this claim. It’s my day job to know this stuff, and I do need to know specifics. I couldn’t find anything in a quick search.

Now we just saw Apple sell fewer Macs while during the same quarter several PC manufacturers sold many more units. It’s the same metric.

Manufacturer to manufacturer is a totally different story. To make a valid comparison about unit sales, you need to look at specific products within a price range. Otherwise it’s like comparing cubic zirconia to diamonds, or the cheapest car to the $13 million Rolls Royce Sweptail.

There is no narrative. This is not politics. It’s applying the same metric and not choosing which side to come down on depending on which brand had the plus sign and which had the minus sign in front of their numbers. Apple has always made more revenue and that’s great if you’re one of their shareholders. But Apple making more revenue does not make the Mac user experience any better.

Apple couldn’t even cover its derrière for quite a few years while they focused on lower end pricing and licensed Mac OS out to even cheaper manufacturers. It took Steve Jobs to focus Mac back to the high end premium range and broaden the product line to include mobile devices and services for the company to become healthy once again.

Hence, their revenue is not was this thread was ever about. This thread was about Mac users and Mac buyers, and what has changed as of lately for them.

Apple is making big profits off of Macs because people are willing to pay more for them. If they once again moved from their focus on premium products and services. And there is the chance that services could become so popular that Apple changes its privacy and security policies to start selling data and advertising like Google, Facebook, Amazon and Microsoft, and prices of Apple products go down.

Apple wasn’t able to maintain number of Macs sold (their numbers, not Gartner’s, not mine)—obviously fewer people wanted to buy a new Mac.

I’m sorry that you feel bad about this; like you and most other consumers, I’m not happy about shelling out mega bucks for Macs too. But whenever I have used a PC over the years, it has made my life totally miserable and my time considerably less productive. Though I’d rather spend the money I’ll be doling out for a new Mini or Air in the next few months on fashion and entertainment, a cheaper PC is not a good option for me. And I do realize that in order to remain in the black Macs have to necessarily cost more than PCs, and that there are people like me that are willing to spend more for what is the better system for me.

In the past it had been suggested that that was because all manufacturers were selling fewer computers. But as we just witnessed, that is not the case. Apple sold fewer units while their competitors sold more. To somebody who’s interested in using Macs (as opposed to making money off Apple shares) that’s a bad sign.

In economic terms, what it means is that Macs are more profitable than PCs and Apple is not a non or not for profit company. Although many fewer people are willing to pay a lot more for Macs, they are extremely more profitable than PCs. It’s one of the reasons why Apple is very profitable while still sitting on mega billions of dollars in cash and is the first trillion dollar US company, and is currently the only trillion dollar firm in the world.

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The issue I’m having is that I don’t see any acknowledgement that things are more complex than “Apple is messing up.” In a quarter where the unit sales were down slightly and revenue was up, that’s not really a point, that’s a narrative, one that seems immune to discussion or disagreement. Has Apple neglected the Mac? Certain models of it, sure. Is it causing Apple to “wither”? Unit sales have stayed pretty much stable for the last three years, so it doesn’t seem like it, no. In what you yourself has noted was a stagnant PC market (0.1% growth), Apple sales dropped by a tiny bit. Eek.

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I absolutely expect that to happen. These updates have strengthened the Mac and started rounding off their portfolio. If they now would actually ship that new Mac Pro, we’d be pretty close.

My concern is that they maintain that momentum. If down the road they let these minis wither the way they did with the last generation, they’ll be in trouble again. If they stay committed and aggressively update and innovate, I’m optimistic their sales will recover. Tablets have not become the future of computing. And despite all the smartphone hype, plenty of professionals still need real computers to do real work. I’ve never doubted that pros will pay good money for excellent tools. Apple has enough of that history in their blood.

I think that’s a fair point. This mini can hardly be called an entry-level Mac as maybe the original mini might have been. This new mini is much more of a headless iMac. But wouldn’t it also be fair to say that today’s entry-level/consumer Mac might just be a less expensive portable Mac? The $999 MBA is definitely not cheap, but it’s a svelte, solid notebook that runs the latest and greatest macOS. It gives somebody with no prior kit a chance to get to know Mac without shelling out $2k.

Simon

    November 5

Tablets have not become the future of computing. And despite all the smartphone hype, plenty of professionals still need real computers to do real work. I’ve never doubted that pros will pay good money for excellent tools. Apple has enough of that history in their blood.

For the moment, this is true. Although it will take some time, I think that advances in technology will enable tablets to replace desktops and laptops. When I decide on a new Mini or MacBook Air in the next few weeks, it will definitely cost less than the either our first Mac, an SE 30, even ignoring inflation. And the LaserWriter we bought at the same time cost more than the SE 30. And the beloved SE 30 is not nearly as full featured or capable as even the first iPhone.

Except for what I do for work, personal finances and record keeping, my iPad does just fine for banging out emails, watching Netflix when I’m not near a TV, catching up on news, searching, surfing and shopping on the web. The day that iPads have enough power, memory and rendering ability to handle full versions of InDesign, Photoshop, Illustrator, Filemaker, etc. and plug into a big screen will be the day I phase out whatever Mac I have. And there are many, probably millions, of people out there who only use the desktop or laptop provided by the company they work for and use it just for work, and who use their phones for everything else.

It will take some time, I think but tablets have a great future.

I don’t think it’ll ever happen. First, in order for a table to replace a computer for me, it’ll have to have the usual array of code writing/building tools I use: emacs, gcc or clang, perl, a fortran compiler, and I’d have to easily be able to get files on and off of it and compile and install Open Source graphics tools. Second, it’ll have to have the processor(s) and ability to deal with continuous heat loads due to running multiple number crunchers at once.

Just last night my daughter said she wanted one of the new iPad Pros (fully tricked out with the keyboard stand, of course) in order to process videos. I told her that she already knew she could do that stuff on her MacBook Pro, while I wasn’t certain you could on an iPad (how, for example, do you get video on and off, and are the video editing tools on an iPad as fully functional as on the Mac?). She decided she’d be better off for now just using her laptop.

Maybe not for you but iPads have almost completely replaced traditional computers where I work (Lenscrafters) at the retail and field level. Every tool I need to do my job has been ported to work on the original iPad Pro (maybe second gen, not sure).

On a personal level my iPad is now my only computer and has been for a few years now. I find it has very few restrictions. I find I can do all the photo editing and sharing I need to with no problems.
James Arnold

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It’s the same for me and pretty much everybody else in my department. You don’t run top notch research on sub-par tools. Demos for visitors, sure iPad’s great. Writing code to extract and process experimental data meant for publication in top journals - forget about tablets. People need file systems, NFS & SMB shares, X forwarding, tools like vi, emacs, gcc, python, make, autoconf/automake, latex, heck anything meant for Linux you can basically compile on a Mac. Forget about that on iPad.

Not to mention the locked down hardware. I need to be able to interface lab hardware with serial ports, USB, or in some cases even PCIe. None of that works with any tablet - iPad or Android. Why should it? There’s not a single advantage to recompile all that stuff to work on iPad except for maybe that a decent iPad is $1500 while a MBP is $2500. But our latest x-ray pixel detector we just interfaced to read out cost about $1M. So that extra $1k spent to get a MBP, it’s quite simply noise nobody cares about.

If the Mac were to fade away and people be told to use iPad instead, I’m almost certain my entire community would switch to Linux on some PC hardware within 5 years. Kind of the reverse of what happened when Macs became ubiquitous in science departments and large research facilities around the the early 2000s. Here’s an example from my colleagues at CERN of what that looked like.