A couple of weeks ago, market research firm Canalys made a significant prediction that by the end of 2012, Apple would be the number 1 PC vendor in the world. To get to this number, they recognized the iPad as a personal computer and pointed out that if you include iPad’s, Apple would be the #1 PC vendor as well as #1 mobile computer vendor in the market by the end of next year.
Although this prediction came from a respectable research firm, this same line of thinking was given even greater weight last week when HP’s CEO, Meg Whitman, told French reporters, when asked about the Canalys report, that she too believed that Apple is on track to replace HP as the #1 PC vendor in the world, although she hoped that HP would retake this position in 2013.
For the last 10 years, Apple has been all of the OEM’s worst nightmare. They became #1 in portable music players, and then became the #1 handset maker. And with the iPad they emerged as the #1 tablet maker. Now these OEM’s have to put up with the reality that Apple is on track to become the #1 PC vendor as well. And there is something else that Apple does that really irks them too. The fact that while they are having to live with margins of about 5-8% on almost all of their products sold, Apple is making margins well above 25% on everything they sell.
There is some controversy in the market research world about this idea of adding iPads into the overall mix of computers sold since most PC market researchers put tablets in their own category and do not count them as a PC. But that is very old line thinking and if Meg Whitman is counting them as part of the way HP judges PC market share, then the researchers who count PCs in general will need to adjust their thinking on this also.
But Whitman’s comment that they can overtake Apple in 2013 is an interesting one. For one thing, I suspect she is hoping that by that year, their ultrabook will be a big hit and help bring their market share back up in laptops. Also, I am sure she is counting on their Windows 8 tablet to be a big seller in 2013 and that they can create a branded Windows 8 tablet that businesses and consumers want. I believe this is a good goal, but one that may not be realistic.
Keep in mind, Apple’s mantra is to stay two years ahead of their competition at all times. What this means is that they are not standing still. Although we don’t know what is in the iPad 3, I have no doubt that it too will help extend their lead in tablets well into 2013. By 2013, when the first generation of Windows 8 tablets are just hitting stride, Apple will introduce the iPad 4 (or 3S) and could have significantly lower prices by then.
We are hearing that Microsoft’s fee for Windows 8 tablet version could be as high as $68. If that is true, right off the top the BOM costs of Windows 8 tablets will most likely force prices higher than Apple’s low-end iPad is today. And if Apple starts lowering their prices in 2013 as I suspect they will, Windows 8 tablets would be at premium pricing.
Also, while Microsoft and Intel and their partners are excited about ultrabooks, their current pricing is too high for consumers. The good news is that by the end of 2012, we could see some really solid ultrabooks as low as $599 (without SSDs). But the bad news is they don’t know what Apple has up their sleeves with their MacBook Air line for Q4 2012. While Apple will never try to beat the competition at pricing, they still could lower their Air prices significantly and market it to consumers as getting more bang-for-the-buck by then.
And even if Android tablets start gaining market share in consumer markets in the future, most of them are coming from non-PC vendors. The major PC vendors are winding down their Android tablet programs and all the big guys will be backing Windows 8 by the end of 2012. They must hope that Windows 8 tablet is a hit for this to give them any market share boost over Apple.
That means that all of the PC vendors will most likely lose ground to Apple next year, and knowing Apple, once they get to the top of the PC market share mountain, they just may have enough new products in their upcoming arsenal to keep them there for some time. If this happens, the big PC companies may have to get used to playing second banana to Apple in this new role of #1 PC vendor, something that they would never have dreamed would happen.
Tim, I have been reading your quotes and articles for a very long time. Congrats, you are one of the few in the entire industry that truly ‘gets it’. Nice summary.
What makes an ultrabook so attractive is the SSD. The speed difference is tremendous.
No cutting corners here. The SSD makes the experience simply better.
Tim, I agree 100% with bbrewer.
I do believe you have somewhat of a bias toward Apple, but so do I, and for good reason. We did our homework! I have been a professional user of Apple equipment since 1993, and an ardent admirer of Steve Jobs (who was 10 years my junior) since the very beginning. I watched them go from the “beleaguered Apple” to top of the heap, and have had literally hundreds of people who depended on my expertise to (not meaning to sound like Billy Graham) “show them the way”. And not a single one ever regretted the move. I know neurosurgeons and oncologists who are not embarrassed to say they actually sleep with their iPads ;-O) Really!
I will agree with you that even though Jobs is not here anymore to direct the fate of Apple, he has built it to a point that it is staffed with a bunch of A winners, unlike that first time when he was thrown out of the company. Apple at that time was dysfunctional to say the least. Yet even during those dark times, I preferred to run Macs in my lab at the University of California because they still ran a lot more reliably and with the least amount of hassle compared to the Windows platform. I am not making this up, because I used to be endlessly frustrated each time I had to use a Window box, in some other people lab. The crashes that they suffer, unlike the Macs, can very often require the intervention of IT people to bring them back into working condition. On a Mac, the crashes simply can be solved with a reboot and the most you can loose is the work you were doing at the time of the crash that you forgot to save.
What’s making Apple successful is a combination of hardware, operating system, app store, cloud, and media access. They’ve been at this a long time. Microsoft is coming very late to this party, and it’s not clear that they have the right business model to compete with Apple any more.
It will be very difficult to dethrone Apple for the next 5-10 years. To do it will require that you’re riding on the next truly disruptive tech wave.
I agree with this, except that I would qualify the statement “it will be very difficult to dethrone Apple for the next 5-10 years” by saying that the prediction may well depend on Apple maintaining a Steve Jobs level of innovation without Steve Jobs. If they don’t, there are always people coming up with new ideas who could take Apple’s crown away.
One thing no one mentions… is quality of products. When volume goes up, quality goes down.
A friend of mine’s son bought a 15″ Macbook pro, 3 years back. He was 17 at the time and spent almost all the money he earned from his first summer job on this nice machine. His dad is a long time PC user (as was his son before this) and he tried to convince him to get a cheaper PC laptop, but the kid wanted nothing of it… he wanted a Mac.
This is Apple’s aura at work.
But wait…., after three years, the machine broke down and he hadn’t purchased the Apple care warranty extension. The repair estimate cost was more than the cost of most current 15″ pc laptops. His Macbook pro is still usable, but now crippled. His father recently asked him if the extra cost of the Macbook pro was worth it and if he would buy another Mac. His reply was no and never !
I’ve been a Mac user since 1984. I pay extra, but I expect quality in return. Are you listening… Apple ??
Where is it written that quality must decline as volume goes up? In fact, unless you start cutting corners, the opposite should be true. Besides, your condemnation of apple quality is based on the failure of a single sample after three years? Not much of a case.
The lesson for a young person to learn is that miniaturised technologies are more fragile and expensive to repair when compared to desktops. The corollary is that one always purchases extended warranties for such equipment regardless of brand.
3 years is a pretty good stretch of time for any laptop. Certainly not the minimum but what was he expecting? 10 years? 5? 25? or is this really about him not having the cash to afford another Macbook ergo Apple is bad? It’s not unreasonable to replace your computer every 3-4 years I know a lot of folks who do. Technology advances.
BTW my dad’s macbook is 5 years old and still good as new. My brother is on his second Windows laptop in 3 years. The kid should be grateful.
My 2005 PowerBook G4 is still going strong. It was Apple’s best in its day; today it is still more than adequate for web browsing, e-mail, word processing, spreadsheets, and more. In short, what it has been doing since it was no. That is due to OS X, which does not suffer from hardening of the software like Windows. The only thing it does not do well is video – modern videos are too big to display smoothly.
That’s a southing anecdote for the PC fans, but it’s hardly generalizable. Macs tend to last at least twice as long as the PC, and that is assuming you are rebuilding your PC from scratch about every year or two as they become incredibly lethargic over time, and need constant maintenence. Mac is the deal of the century. Like getting a porche for the price of the DX model Honda/Toyota, etc.. when compared to the ‘PC’ industry.