The Six Five team discusses Apple Mac sales declining.
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Transcript:
Pat Moorhead: What’s going on? Apple’s down, I mean, wait a second. M1, M2, but they’re down like 46%. What’s going on here, Dan?
Daniel Newman: Less channel to stuff maybe to keep their numbers strong?
Pat Moorhead: Possibly.
Daniel Newman: Yeah, so I don’t think it’s any secret, Pat, that the PC space has been hard hit. We also have to remember the PC space had explosive growth when everybody went home and everybody had one, two, three more PCs, tablets, smartphones, devices. So on one side of every boom is a bust. And in silicon, when you watch the silicon wave, well the devices have to follow. When you see the shipments from TSMC and Intel go down and AMD and everyone else, guess what? Those devices are going to follow. And so the most recent market share report that came out, the Q1 2023 market share report that came out from Canalys basically said this market is in disarray. I mean it is, Pat, it’s kind of a disaster. 32.6% down across the board.
But Pat, I mean nothing looked worse than Apple falling nearly 50%, 45.5% drop. This is just incredible. What is the deal here? So we have M1, you have M2, like you said, you have all this demand for new devices, Pat, but is this an economic thing? I mean, Apple is the most expensive alternative to PC on a Mac. Is this a lack of business spending that’s going on and companies have stopped spending? Was this an Apple had a huge wave of end of year and Christmas selling through the holidays and basically just zeroed out in the next quarter? Just as a comparative basis, they dragged the average down somewhat substantially. I mean, HP led the pack with only a 24% negative annual growth, but we saw pretty consistent among the rest. It was around 30, meaning Asus, Dell and Lenovo all around 30%. So all the other were sort of seemingly sustained about a one-third drop or a little bit less, while suddenly Apple fell way, way harder.
Now, I gave all those different conditions. I would say I’m confident that it was a little bit of all of those factors. I think at the end of the year, Apple is a bit more of a retail phenomenon than other PC makers. They probably did see some pull forward of people who bought Macs for holiday presents. I think enterprises are spending less and being more frugal. So meaning when an enterprise maybe at one time was offering an option of a Mac for their employees, maybe they’re considering not offering that option right now when a Mac might have an ASP of twice what the PCs that they would offer their employees cost.
But these are, like I said, these are not hard truths. These are just my analysis of what likely happened, Pat. But here’s the one thing I will say. I think we’re going to have one or two more quarters of pretty difficult conditions, but I do think you’ll have a cycle turnaround again. New processors, faster applications, generative AI, Pat, AI on silicon, things that are going to need to be on these devices to optimize these workloads are going to require another wave of PC purchases. So I do think we’ll come back from this. I think the long withstanding the PC is not really dead, the thing that you and I like to say, is true, but we are in a gully. It’s the gully at the outset of an amazing run-up, and I think we’re going to be in good shape.
Pat Moorhead: Yeah, overall, the PC market is still above where it was pre-pandemic and the amount of PCs that were purchased to be able to work at home and then have one PC per person at home. So you stopped going to the movies, but you gained more. You watched more movies, more Netflix on your notebook, and I think the market as a whole is going to be solid, particularly when you look at the enterprise market. I have some doubts over consumer. On consumer, my expectation is the growth is going to be driven by AI on the platform. We’ve seen chip makers, particularly Qualcomm, you look at what AMD and Intel are doing on the platform itself with Windows that has an 80, I don’t know, 93% market share versus Mac OS. A big thing is going to happen. And then on the enterprise side, I still believe that we have yet to come up with an optimal platform for this new hybrid work era.
It’s not just about what can I do at home that I did at work, how can I effectively go from work to home, home to work, being on the road and having an optimal experience where it’s more like being there? I think the early moves on making the experiences are good and they’ve really focused around improved cameras and improved audio capabilities. But I don’t think we’re nearly where we need to be to be just there. And this is going to sound a little bit wackadoodle, but to be there, I think you need larger displays, you need higher resolution displays. Dare I say this is a potential for XR. I know, sounds crazy. You can’t even talk about the Metaverse and XR before being laughed out. But how am I going to feel like I’m in the same room with you, Daniel, on this tiny display, in this grainy video and this terrible audio?
It’s just not going to happen. Our brains don’t work like that. The other thing we need to do is have a lot of sensors on the system as well to be able to secure this PC, whether it’s inside the perimeter, outside the perimeter, not on a VPN or on my home router. So I think there’s going to be a ton of growth in there. Let me hit the Apple thing. Apple absolutely fell on their face. And if you remember two or three quarters ago, they were the darlings that had the highest growth or the ones that sucked less than the Windows folks, related to the decline. And everybody’s like, “This just shows, this just shows the resurgence, baby.” No Apple stuffed the channel. Okay? No bones, black and white. I think their consumption through the channel is pretty good, particularly when you see deals, Daniel, $900 bucks off a Mac, okay.
My entire career, I’ve never seen that aside from blowout at the very end when they didn’t do a good job on doing that. I think net net it shows that Apple is human, that Apple’s not going to run up the score on the industry related to the PCs. Note of caution, Apple consumes most or all of the profits in the consumer PC space. I think the only exception will be some of the high end gaming rigs. The Windows folks still have the dominant share of profit dollars in the enterprise. But make no mistake, Apple is gunning for that area and they’re willing to spend, what? Their 10th year of pounding their head against the wall? And they used M1 and M2 and the Arm architecture that has a great high degree of security to be able to roll those numbers up. And no longer is Apple an embarrassment in the enterprise. They’re actually a formidable opponent who’s willing to go another 10 years to go slowly perk up market share.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
