Apple Is No. 3. So What?
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Several people have asked me today if Apple's Mac success is the future doom of the Windows PC. They're smokin' something, right? |
Gartner and IDC both released preliminary PC shipment numbers today that moved Apple up into third place for U.S. shipments, way behind Dell and HP. Gartner put Apple's market share at 8.1 percent and IDC at 6.3 percent for third quarter.
Apple released its fiscal fourth quarter 2007 earnings today, reporting Mac shipments of more than 2.1 million units. On Friday, Apple will release a new Mac OS X version, Leopard.
While some analysts attribute Apple's growing Mac shipmentsup 34 percent year over year and 23 percent sequentiallyto an iPod and iPhone "halo effort," I say they're wrong. Apple's strength is in the channel, where its retail strategy works really well.
Simply put: Apple's nearly 200 retail stores offer a better computer, peripheral and software buying experience. The iPod or iPhone may draw people into the stores, but it's the sales experience there that will keep them coming back. Apple retail works because the company isn't selling products but a Mac lifestyle.
Apple by no means invented lifestyle marketing, but the company has done more than any computer competitor advancing the concept to technology products. Blackberry is a lifestyle choice, as was Palm around the turn of the century. Windows 95 was a lifestyle product, too; same can be said of Xbox, and Microsoft is trying to build lifestyle around Zune.
Lifestyle marketing typically sells aspiration (your life will be better if you use this product) and community (you will belongor be coolif you buy this product). Apple has done well turning the Mac, iPod and iPhone into lifestyle products.
Another lifestyle product attribute: Peripheral sales. Lifestyle products tend to be more personal, and so people are willing to spend more to personalize them. The Compaq iPAQ was the breakthrough Pocket PC handheld. But Compaq and its channel partners made the real money on the accentscases and doodads that personalized the handheld. The iPod aftermarket is testament to the personalization sales potential of a lifestyle product.
Apple's computer market share gains are impressive, but they are by no means decisive. Economies of scale favor Windows PCs. An apple today is pie tomorrow. The Acer-Gateway acquisition will almost certainly bump Apple back to fourth place during fourth quarter.
While no real competitive threat, Apple still has something to teach Microsoft and its partner channel. Windows Vista could be a lifestyle product, too. The opportunity for Microsoft and its channel is context. Vista can adapt to many different contexts and so to many different lifestyles. Microsoft's April 2005 "Start Something" ad campaign for Windows XP targeted different lifestsyles around various usage contexts. The campaign was way late in coming but still broad, hitting broadcast, print and the Web.
Start Something was a great ad campaign. Maybe it was too good. Microsoft may have done so well selling Windows XP late in its release cycle that Vista suffered some sales malaise as a result. Microsoft has yet to come out with as an effective Vista ad campaign as Start Something. Lifestyle is the key.
Related Posts:
- Vista: Cat Scratch Fever, Microsoft Watch, Oct. 19, 2007
- Vista: None for All?, Microsoft Watch, Oct. 4, 2007
- XP's Success Isn't Vista's Failure, Microsoft Watch, Sept. 28, 2007
- Windows Vista Ultimate: Plus or Minus?, Microsoft Watch, Sept. 26, 2007
- Broken Windows, Microsoft Watch, Aug. 9, 2007
- The Vista Contradiction, Microsoft Watch, June 4, 2007
- How Does Windows Vista Rate?, Microsoft Watch, May 20, 2007
- Is Vista One Step Ahead?, Microsoft Watch, May 16, 2007
- I Shacked Up with Windows Vista, Microsoft Watch, May 10, 2007
- Personal Vista, Microsoft Watch, May 2, 2007
- What Would You Pay for Vista?, Microsoft Watch, April 22, 2007
- Vista Missed Its CueNow What?, Microsoft Watch, March 23, 2007
- Windows Ultimate Advantage, Microsoft Watch, Jan. 7, 2007


Comments (19)
I'd venture to say that Boot Camp probably plays a substantial role in the current success of the Mac. Whether a customer in an Apple store actually ends up purchasing a copy of Windows XP or Vista to run on their new Mac, the perceived safety net of knowing that they can, gives peace of mind. I have heard dozens of stories of PC owners gone Mac recently and feeling comfortable because they know they can dual boot with Windows if they want or need. But I have to say, the overwhelming majority of new Mac users find OS X so easy and satisfying, they just don't bother with Windows anymore.
Posted by Rich Gowran | October 22, 2007 9:23 PM
"Economies of scale favor Windows PCs", Joe would you please elaborate on this for us. Does this mean that Windows box assemblers can build computers for less money than Apple can? Do they have a more efficient distribution channel? Do they spend less on the OS that they install on these boxes, than it costs Apple to supply their own?
Posted by Ed Jardine | October 22, 2007 10:14 PM
How about "Bringing Back the Joys and Speed of AT"? Or "if you're not an SA, we'll break your machine. If you are, we'll do it twice."?
Posted by Ken Houghton | October 22, 2007 10:20 PM
Joe, Please get over with Mac and starts some other fresh topics
So far , you have repeated the following entries in a loop :
1) Vista
2) Live Search
3) Linux is good
4) Microsoft is bad
5) Mac is good
6) EU
7) Windows Genuiues Advantages
You like to recycle, you should be an environmentalist
Posted by Marty | October 22, 2007 10:46 PM
But hey I at least agree with 3) and 4)
Posted by Vexorian | October 22, 2007 10:54 PM
I wonder how Apple manages to work out so well in Europe... 'cus besides UK, there are almost zero Apple stores around.
Yeah, there is a sort of lifestyle around Apple products, it's part of the whole, people love it, people buy it, there are Apple stands in stores and supermarkets, and it's no more the iPod's halo effect.
Good and Powerful Products, Good OS, iLife fulfills a large part of everyones day to day electronic life and has alot of advance on MS locked stuff, iWork is cheap and cool, Hardware support is tighlty controlled and helps avoiding problems... Oh and, there not really more expensive than PC counterparts now (at same specs of course). VLC runs perfectly on it too ;-)
Face it, Apple is Good, and PCs depends on what you put inside (and my PCs are Debianized)... all the rest goes throughout the Windows.
Posted by JaXX | October 23, 2007 4:29 AM
Stop clutching at straws.
Bitter, cynical IT professionals such as I - 20 years at the coal face - dont buy lifestyle products. Or stuff with other folks names on it.
We buy beer, nitrous injection kits, ducati (in Europe), pocket protectors, large calibre weapons (in the US) and nuclear accelerators.
So when someone comes along with a laptop thats fast, based on un*x, is reliable, and as a side event, allows you to run MS operating systems in one of THREE virual environments, guess what we buy?
Buggy, DRM infested, machine-sapping, Windows-ME for a new generation Vista ?
Or a Mac.
I really *tried* to like Vista for a whole two months. Till it started deciding for itself where my files *should* be and deleting them.
What a Piece Of Sh*t. 'Lipstick on a pig'.
Lifestyle my a**. Reliability, speed. Something I can run my business on. MacOs has joined Linux, Solaris, AIX on the list of 'bet my career' operating systems.
Thats what MS used to have, before Balmer became CEO. They might just get that back once he's fired.
Till then, I'm an apple-wh*re.
Lifestyle ? Do I smell like some teenager?
---* Bill
http://www.billbuchan.com
Posted by Bill Buchan | October 23, 2007 5:13 AM
Joe you're a polemist.
I'm thinking that your analysis is pretty stupid. Out of the us there's not a lot of apple store.
I'm sure that bootcamp, parallels and vmware are good arguments for people who want to switch.
Mac OS safty is an other one.
Microsoft vista sucks, so cleaver people look around...
Apple is more and more dangerous for pc's assemblers...
Posted by FLux | October 23, 2007 5:30 AM
Vexorian wrote: But hey I at least agree with 3) and 4)
So do I. If most people knew the truth about Micro$oft and Linux, they probably would too. But M$ FUD is still keeping people in the dark.
Posted by Maddog | October 23, 2007 6:57 AM
I have a pc and a macbook laptop and I gotta say I enjoy using the mac more for my daily stuff and my PC for my gaming fun. Maddog I dont know what you mean about the truth about windows and linux. I happen to like the both. I enjoy having choices.
Posted by ryox82 | October 23, 2007 9:15 AM
i thouhgt budling was illegal. oh only when your a monopoly. ok i can put windows on any pc including a mac. can i put os/x on any pc or just a mac? apple best hope not to become a monoply. bundling all that iSoftwar: iMail, iMovie, Quicktime, Safarie. is apple forced to carry bloatware and junkware to replace mail, webbrowser and quicktime. again i foget they are not a monoply and can do whatever until then. why is it that at was good for the goose not good for the gander?
Posted by someone | October 23, 2007 9:57 AM
I can not find more appropriate context for an old saying that says ..."The first is first and the second is nothing...". Did you said third Joe?
Posted by evan | October 23, 2007 2:23 PM
mac is cool, mac is great, but when it comes to business mac is late. the mac apps are half ass, and don't really provide that much. i like its ping tool though, but it has too much fuss. no one will ever win the argument cuz we all have our favs, but a bad day on a Vista system is better than any day on a mac!
cheers.
Posted by timkelly | October 23, 2007 3:25 PM
A lot of people here have pointed out that the Mac is an upscale product, and I think most could agree on that one. Mac really contests with IBM computers , or rather with the MS Windows systems, on higher end computers. When somebody switches from a Windows computer to a Mac, most likely they would have bought a more expensive computer with Vista or XP on it instead. So the Mac is hurting the bottom line of both PC OEM's and MS, although MS less, because they own a lot of Apple stock.
So its Mac the competition to Vista on the high end. And Linux on the low end. The low end of the PC market basically has a hard time running Vista, but then dosen't everything. Linux is a faster OS, with far fewer bugs in it than Windows, so not only will it capture a part of the high end PC market in time, but it will be the main challenge to MS, on the low end. For that reason, MS was forced to extend XP for another 5 months. And they will not be able to drop it then even, not without losing the bottom third of the market.
So Mac is still basically a niche computer for people with more money, who want a good computer, with a better OS than Vista. But then, everything is basically better than Vista, including Linux and just going back to XP. But could the Mac become more than just a niche company? Could they end up doing better than say 10% of the market? Doubtfull. Unless, say Dell and Apple merged. Remember the CPO of Dell back about 6 months ago was trying to license the Mac OSX for Dells. This is not so far out of the question as a possibility.
One thing I would like to see happen in the courts of either the USA, EU, or somewhere of importance, is a government to fine MS greatly for not allowing the OEM's to install other Operating Systems on their computers as dual boot systems. These systems would sell. Imagine what would happen if you could buy say a Dell/Mac with XP/Linux/MacOSX and boot up to all three.
Posted by chips | October 23, 2007 4:36 PM
I don’t think lifestyle is the key, better products are the key.
Just as I like my iPod nano better than my RCA mp3 player, I like my friends macbook Pro better than my own XP pc. I like the operating system better, the iLife software, photobooth, the built in camera, etc.
And I don’t enjoy crashes, lock-ups, virus scanning and buying new virus software. I’m ready to leave behind the PC experience at home and change to MAC. I can’t control the office, but I can control the household.
All my experience and many friends express the same message, Apple is making better products!
Posted by Lee | October 23, 2007 5:37 PM
Bill Buchan
"I really *tried* to like Vista for a whole two months. Till it started deciding for itself where my files *should* be and deleting them."
No operating system on the market deletes files on its own ...only the user is capable of that.
Saying that you (by your own words) are "I'm an apple-wh*re."
Just really shows your bias.
Posted by Neil | October 24, 2007 7:28 PM
The Acer-Gateway merger will push Apple back to 4th place? Puh-leeze. 4th in what, unit sales? Maybe. Not profitability, though. That's what matters. It's not just the raw numbers of product you can push through the channel, its the gross margins earned on each one that enables you to keep on selling them.
To that end, Acer and Gateway are just two boat anchors trying to teach each other to swim. The rapacious competition in the PC world for the lowest common denominator just ends up bleeding them dry. While this merger may offer some marginal short term efficiencies, it won't change the fact that the $299 loss leader they'll throw up against Dell's $299 loss leader just to stay in the game is still...a loss leader. The intense pressure will still be on in the retail channels to "upsell" those $299 orders into something they can actually make money on.
Apple - wisely - stays above the fray by simply not offering an entry in the loss-leader end of the spectrum. As a result, it makes money on every unit of every product it sells. That's why it has twice the market cap as Dell, with a fraction of the staff, and is closing in on IBM. The position that matters is the bottom line.
Posted by Thomas | October 25, 2007 9:20 AM
Bill Buchan, why would a "Bitter, cynical IT professional" have bought a consumer-level o/s like Windows ME, when Windows 2000 was available? Why would you compare Vista (not that I like it much) to a 7 year-old operating system that only the OEMs asked for so that they could sell off inventory of cheap hardware? Sounds exactly like the sort of ludicrous analogies that a teenager might make.
Go back to MacOS where you have a career reinstalling drivers and apps every time there's a point upgrade.
Posted by Mike | October 26, 2007 10:58 AM
" I felt that a campaign like this was needed," says garbege co- founder Malcolm Phipps. It connects the brand with all walks of life in terms of looking at what these dope individuals contributed to their area of expertise, which is the epitome of STREET, SMART, ART.
Posted by advertising campaign | March 31, 2008 7:42 PM