Charlie Wolf: Apple's Mac is a river that flows upstream

April 1, 2014: 7:17 PM ET

It defies the laws of economics, writes Needham's Apple analyst. The iPhone, not so much.

Click to enlarge.

Click to enlarge.

FORTUNE -- Apple's (AAPL) computers cost more than its competitors' -- an average of $700, according to Needham's Charlie Wolf. Yet its market share, as indicated by Figure 1, has grown in 10 out of the last 11 years.

iPhones also cost more than the competition. Yet Apple's worldwide smartphone market share peaked at 23.8% in December 2011 and has been bouncing around at lower levels ever since. (See Figure 6.)

Why the difference? Wolf has a different theory for each device.

The Mac, he says, "seems to defy the laws of economics."

"The only explanation that we see," he writes, "is the now-mythical halo effect. Beginning with the iPod in the middle of the past decade and then extending to the iPhone and iPad, a meaningful number of Windows users who bought these products seem to have switched from a PC to a Mac... What should be underscored is how unique the Mac phenomenon is. Indeed, it's the only situation we've encountered where shifts in the demand curve completely swamped movements along the curve itself.

"In the face of rising relative prices, we view the Mac's success as the rare instance where sales increased in the face of rising prices."

Click to enlarge.

Click to enlarge.

The iPhone is not so fortunate. But its loss of market share, Wolf believes, has more to do with geography and carrier business models than, say, the prevailing theory: screen size.

"The iPhone's loss of worldwide market share," he writes, "chiefly reflects the shift in smartphone market share from developed, postpaid markets to emerging, prepaid markets. This shift was not driven by a change in consumer behavior but rather by rapidly falling prices of smartphones, especially in Asia Pacific, which induced feature phone users to switch to smartphones. We calculate that the iPhone's share of the smartphone market would be over ten percentage points higher were it not for the migration of smartphone sales from developed to emerging regions."

Is that good news for Apple or bad? That depends, I suppose, on what the iPhone demand curve does as the developed world's markets mature.

  • NSA security leak expert says Apple Mail on the Mac is at risk

    Also Safari, Twitter, Calendar, iBooks, FaceTime, Keynote and Software Update.

    FORTUNE -- Ashkan Soltani, an independent computer security expert best known for analyzing Edward Snowden's NSA leaks for the Washington Post, has published a list of applications running Mac OS X 10.9 that he says are vulnerable to the same security hole Apple (AAPL) patched in its mobile operating system on Friday.

    They include apps used by millions of Mac users every day: MORE

    - Feb 24, 2014 9:56 AM ET
  • Video: 30 years of Mac

    Apple has plenty to celebrate. I guess.

    FORTUNE -- The video is lovely. And the elaborate timeline on Apple's home page that introduces the cast, profiles the Macs, and expands on the video's themes is clearly a labor of love.

    So is it churlish to suggest that some people at Apple (AAPL) might have too much time on their hands? Or that those resources might be better deployed fixing iCloud, solving the iPhoto MORE

    - Jan 24, 2014 6:03 PM ET
    Posted in: , , ,
  • How many Macs did Apple sell last quarter?

    The analysts' estimates range from 3.8 million to 5.2 million. Average: 4.6 million.

    FORTUNE -- It was once Apple's (AAPL) No. 1 source of revenue, but today, 30 years after its launch, the Mac is now almost an afterthought -- No. 3 in terms of revenue, behind the iPhone and iPad and ahead (for now) of iTunes.

    The Mac did manage to generated $21.5 billion in fiscal 2013 -- roughly one eighth MORE

    - Jan 23, 2014 8:21 PM ET
  • Gartner: 2013 saw the 'worst decline in PC market history'

    U.S. sales of Apple's Mac grew 28.5% last quarter, says Gartner. IDC says they fell 5.7%.

    FORTUNE -- Apple (AAPL) was the PC maker that zigged when the market zagged, according to a Gartner report on 2013 sales issued Thursday. [IDC begs to differ. See below.]

    Overall, the news was grim. The industry as a whole suffered its seventh consecutive quarter of declining shipments -- down 6.9% for the quarter and 10% for MORE

    - Jan 9, 2014 9:21 PM ET
    Posted in: , , , , ,
  • Charlie Wolf: Why Apple's Mac sales have fallen back to earth

    In 30 quarters, its market share grew 150% and its profit share 270%. Has that run ended?

    FORTUNE -- Needham's Charlie Wolf has been following Apple (AAPL) long enough to still care what's happening to the Mac,* and on Tuesday he took a crack at explaining why the company's most venerable product line (it turns 30 in January) seems to have, as he puts it, "fallen back to earth."

    Beginning in 2005, MORE

    - Nov 19, 2013 10:51 AM ET
  • The last guy to switch to a Mac

    Windows guru Adrian Kingsley-Hughes has all but abandoned the Microsoft ecosystem.

    FORTUNE -- "After more than two decades of being a dedicated Windows power user, and having invested tens of thousands of hours into mastering the platform, and run versions spanning from 3.0 to 8.1, I've now all but given up on Windows."

    Those are words Adrian Kingsley-Hughes, a Microsoft (MSFT) Windows and Visual Basic guru with several how-to books and countless MORE

    - Nov 13, 2013 11:35 AM ET
  • How many Macs did Apple sell last quarter?

    The analysts' estimates range from 3.6 million to 5 million. Average: 4.26 million.

    FORTUNE -- Apple's (AAPL) Mac sales haven't been hurt as much as Windows PC's have by the rise of tablets and smartphones. But Mac shipments peaked in late 2011, and the best Apple can probably hope for now is that they hold up better than everybody else's.

    The analysts we polled in advance of Monday's fiscal fourth quarter earning report MORE

    - Oct 26, 2013 10:31 AM ET
  • Chart: Apple's first weak back-to-school Mac quarter since 2002

    Both Gartner and IDC show summer Mac sales down as tablets replace PCs in schools.

    FORTUNE -- An Apple (AAPL) summer tradition -- strong back-to-school sales of the Mac -- finally got broken by the same disruption that has been draining growth out of the entire PC industry: The booming tablet market that Apple created when it launched the iPad in 2010.

    Gartner and IDC released their third quarter PC shipment reports MORE

    - Oct 10, 2013 7:33 AM ET
  • Morgan Stanley's 530 summer interns [heart] Apple

    In North America, 77% carry iPhones and 57% own Macs.

    FORTUNE -- There were several surprises in Katy Huberty's summary Friday of a survey of 530 Morgan Stanley summer analysts and associates in North America (NA), Asia Pacific (APAC) and Europe, the Middle East and Africa (EMEA).

    First, who knew that Morgan Stanley hired so many summer interns?
    And who knew that they were so devoted to Apple's (AAPL) products?

    Huberty doesn't make a MORE

    - Aug 23, 2013 6:22 AM ET
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by VIP.