Categories

A tale of two disruptions

Last quarter the iPad had unit growth of 166% with revenue growth of 146%. The iPad is selling more than twice the (also rapidly growing) Mac. The two product lines are shown below:



A big reason the Mac is still growing is that it now consists of 74% portables and the MacBook Air and Pro products are still largely unmatched and have a near monopoly in their target price.

The Mac’s average selling price has remained remarkably steady for three years.

But more importantly the iPad and the Mac both outgrew the PC market. Taken as OS X vs. Windows, the growth rates were 27.7% vs. 2.5%. If iOS is included along OS X, Apple grew its “computer” shipments at a rate of 99%.

The following chart illustrates the growth rates for Windows, Mac and Apple as a combined OS X/iOS.

The Windows platform still ran on 82% of PCs sold in the quarter with iOS taking second with 10.5%, OS X third with 4.7% and Android at about 3%.

Even though Mac OS X grew faster than the overall PC market for 20+ quarters, its market share is still below 5%–lower than what the iPhone has been able to obtain in the far larger mobile phone market.

That share has grown from 3.2% in the same quarter of 2008 but it’s still a very slowly changing landscape.

However, if we include the iPad, Apple begins to not only grow very rapidly, it moves up sharply in terms of ranking among PC vendors.

Last quarter’s 16 million OS X and iOS tablets brought it into second place behind the 16.6 million PCs that HP sold. That was enough to give Apple 15% share vs. 15.7% for HP. Over the last three years Apple has gained nearly 12 points of percentage of share.

The other vendors mostly lost share but the most affected were the smaller OEMs. HP lost 2.6 points, Acer 3.9 and Dell 3.4. However “Other” lost 10.5 points. Lenovo is the only major vendor to gain share (+4.48 points).

What’s interesting about this pattern is that whereas in the phone business “others” is a rapidly growing group of companies, in PCs the smaller vendors seem to be suffering. They still make up about 30% of the market but that’s down from about 40% three years ago.

In contrast, “Other” went from 15% to 24% of the phone market in the same time frame. Part of the explanation is that the entry of the iPad took the wind out of the “low end” netbooks and other cheap PCs. Consumers migrated low-end usage to a product re-built around those jobs.

In the mobile phone market, the disruption is in the opposite direction: communication is moving rapidly up-market from real-time voice to latent messaging and from storage consumption to broadband consumption. The companies being rewarded today in the phone business are those who are leading the charge to new markets.

In other words, on the PC, we are witnessing low-end disruption. On the mobile phone we are witnessing new market disruption. The irony is that the low end PC and the high-end mobile are very nearly the same thing but the industries, channels and incumbent business models are very different.

  • Shardsofwisdom

    “The irony is that the low end PC and the high-end mobile are very nearly the same thing but the industries, channels and incumbent business models are very different.”

    That sounds like ‘convergence’. If so, the “disruption…in the opposite direction” is entirely expected.

    • poke

      This is what I’ve been saying for awhile. The mobile phone market and the computer market are being replaced by a single mobile devices market and so far Apple is the only real player there.

  • Anonymous

    Apple seemed to lose out in the first round of the PC, offering an expensive, generally superior product at a time when technology was rapidly evolving and people were price sensitive. Now that technology has boosted the most humble PC into something over-powered compared to the needs of the average user, and prices have dropped dramatically, people seem more willing to pay a premium for what Apple offers. Might smartphones and tablets play out the same way?

    • http://kaizenity.blogspot.com/ FalKirk

      An intriguing question.

      For one thing Tim Cook appears to have done the seemingly impossible by making the iPad the market leader in both low cost AND in premium quality. But let’s set that aside for now.

      The market is so different now than it was in the 90’s. The internet has broken open the closed OS box and allowed people to do much of their computing in the OS agnostic cloud. And Apple, far from being just one of many struggling startups, is now the largest tech company in the world with market leading products and 80 billion dollars in cash. But let’s not let that excuse us from considering the question either.

      This may be a philosophical point of view, but I don’t believe that consumers are price sensitive. I believe they are value sensitive. We’re in the midst of one of longest and worst recessions in history yet Apple’s premium priced products are flying off the shelves and Apple, the company, has doubled in size.

      The problem with Apple computers in 90’s wasn’t that they were expensive. They were, of course. The problem was that they didn’t provide good value. Unless you were in a field that particularly benefited from the advantages of the Macintosh, there was simply no good reason to pay a premium for the product. Apple’s sales and Apple Inc. suffered accordingly.

      I think it’s a mistake to assume that every industry devolves into a low cost provider. If it did, we would all be buying our clothes from K-Mart, our cars from Kia and our furniture from trailer trucks parked by the side of the road.

      Further, I think it is a mistake to assume that all products turn into commodities, although I will agree that this is often the case. Take a look at Apple’s history since Steve Jobs returned. The Mac not only has maintained its price for the past decade, but its popularity has grown. This is because – rather than become a commodity and join the other PC makers in the race to the bottom – Apple has continued to improve the Mac so that it is always more valuable than its price.

      But an even better example is the iPod. In 2001, there was nothing as good (and nothing as expensive) as the iPod. Over the years, the iPod became the best product on the market (though competiors never did catch on to just why it was superior). The iPod continues its price domination and its market domination to this today. But 10 years after the dawn of the iPod, its day in the Sun is done and it is entering its twilight.

      And what steps did Apple take to prolong the prominence of the iPod? None. Rather than prop up the iPod (think Microsoft Windows and Office), Apple introduced the iPhone, which was an iPod and much, much more. And rather than prop up the pocket computer that is the iPhone, Apple introduced the iPad, which has all the computing power and all the ease of use as the iPhone and much, much more. And rather than prop up the iPad, Apple introduced Siri, which may well be the fourth great input device introduced to the world by Steve Jobs (mouse, click-wheel, touch, and voice). And rather than prop up Siri, Apple introduced…well, I guess we’ll have to wait and see what they will introduce.

      The point is, the cycle of the 90’s need never repeat itself. The premium product need never become the product that succumbs to price sensitivity. The iPod, the iPhone, the iPad are all premium priced and all eminently successful. It is value, not price, that drives consumers. So long as Apple continues to give consumers products that provide more value than they cost, the 90’s will never repeat, and Apple will do just fine.

      • Anonymous

        This is all well argued (and well written!) and makes many good points.

        The main question I want to pose is: Why is Android gaining market share?

        But first let’s talk about price sensitivity. While I do see your point, I can’t quite agree that consumers are not price sensitive. I think rather that a consumer turns to value only after a product becomes readily affordable. Back in the day when a lower-end PC could cost $5,000 (in today’s dollars), most people had to do with lesser machines, value be damned. An eternal-life machine would be good value at any price, but that doesn’t mean I can afford one at any price. Everyone loved the first Macs and immediately recognized their value, but their high cost put them beyond the reach of most. Today, price has long ceased to be a major concern, and people find Apple’s superior value within easy reach. But let’s also note that a PC’s value is far higher today than twenty years ago; what has profoundly changed is its affordability.

        I think the iPod showed Apple at their best as they had the product well thought out and were canny in their pricing. They were also fortunate in their competitors as no one managed to create a truly compelling alternative. Had one ever surfaced, then Apple would have been forced to lower their premium prices.

        Now again: Why is Android gaining market share? Most agree that iOS offers a superior user experience (in the largest sense of the term), which we might roughly equate with value. I think that can only mean that consumers find the price too high. This seems likely in that part of the market that smartphones have not yet captured. So might prices have to drop before consumers see the value in Apple products?

  • Anonymous

    Apple is suffering from the disconnect (I daren’t say fragmentation) between iOS and MacOS, both in terms of software (iOS users can’t use their apps on the desktop) and hardware (MacOS still uses very expensive Intel CPUs, preventing Apple from any presence in the low-end desktop market).
    If i were Apple, I’d be frantically working on a way to get iOS in laptops and desktops, and thus extend my walled playpen.

    • Anonymous

      It has already been painstakingly explained why this doesn’t work and why Apple has no interest in the low end desktop market. Why keep bringing this up when you have no new arguments?

      The reason that Apple doesn’t create a low cost PC isn’t because intel is so very expensive. Apple could use Celerons, or Atoms which aren’t – they could use AMD Fusion which isn’t. They could port OS-X to ARM. They have any number of options – that they show no interest in taking because they simply don’t want to enter that business.

      http://files.shareholder.com/downloads/INTC/1426188145x0x509951/131CE422-EE81-40CC-B7B0-B307DA8DC499/Oct_23_11_1ku_Price.pdf

      Apple has no interest in entering the netbook market, they’ve said it loud and clear

      http://www.geek.com/articles/apple/apples-tim-cook-were-not-interested-in-the-netbook-space-20090423/

      • Anonymous

        More acurately, what Apple has said is: “We don’t know how to build a sub-$500 computer that is not a piece of junk,” Jobs said during an Apple earning call in 2008 (http://www.tomshardware.com/news/Apple-Netbook-Nano,6897.html). Significant lowering the bill of materials by going ARM instead of x86 might help them with that.

      • Anonymous

        And as my data shows, even the CPUs they use are only $200 and there are x86 chips available that are $50 – so no – even with ARM they still don’t know how to make a sub-$500 computer that is not a piece of junk.

        They do however know how to make a sub-$500 tablet that isn’t, which is why their focus is on that.

      • Anonymous

        It’s not just the CPU. MacOS and its apps require more RAM and disk space and CPU/GPU power (hence no Atom Macs), x86 requires more battery and supporting circuitry…
        Apple won’t enter the low end until they can have a nice product for it and 50+% margins. MacOS on X86 won’t scale down, MacOS on ARM (a *3rd* ecosystem ??) doesn’t make sense, so their only move is to find a way to make iOS pleasant to use in a non-touch setting.
        I’m sure Aplle would love to see the same growth is laptops and desktops as in media players, smartphones and tablets :-p

      • Alan

        When the iPhone came out and I saw the margins Apple was making on it I thought that they would eventually use the margins on iPhone to balance a lower margin on Macs in order to take more PC share. I kept waiting but it didn’t happen. But what they did do was produce the iPad with lower margins. So in my view their attack on lower priced PCs is the iPad, not a lower priced Mac. The attack on premium PCs is the Air line which has differentiation through the tooling / production and the use of Flash which they get in bulk.

      • Anonymous

        a) GPU isn’t a problem – there are available x86 SoCs that would supply the necessary GPU performance such as the AMD Fusion line which is price competitive to Atom.
        b) Memory isn’t a problem. For starters 8GB of ram costs only £40 retail from a top end vendor such as crucial. Apple is certainly paying less, they are well known for gouging on memory upgrades.
        c) Battery isn’t a problem for desktop, so can’t be the reason for them not doing this there can it?
        d) OS-X absolutely scales down – in fact 10.4 would run on Ti-Books in only 256Mb and 10.6 runs on the original intel MacBooks which had 512.
        e) OS-X on ARM makes absolute sense, indeed it’s a virtual certainty, the only question is when will ARM provide sufficient power to justify the move. The benefits of battery life for the MBA alone make it viable.
        f) Apple just killed off the basic white MacBook rather than take it down market.
        g) There is no way to make iOS work pleasantly with a pointer, because every single App would become horribly clunky. It’s the exact same problem in reverse of making every OS-X or windows app work on touch. If you belleve that this is possible then you also believe that Windows 8 will dominate the iPad because it will run all PC software. I’m guessing you don’t actually believe that.

        Literally everything you believe about this is wrong.

      • Anonymous

        Well, literally everything you state about this is wrong:
        a) It’s not .OR., it’s .AND. A passable GPU on a weak CU that’s quite power-hungry such as the Brazos still doesn’ cut it.
        b) £40 of RAM whent targeting £400 and 50% margins is a lot. Why do you think Apple’s memory upgrades are so “gouging” ?
        c) indeed. Aren’t they for laptop though ? Does it make sense to do one and not the other ?
        d, e) and then you get an OS with no apps. General recompilation ensues, and then fragmentation, with people wanting their iOS apps and getting MacOS ones. Not ideal. Plus MacOS is less walled then iOS, so I’m sure Apple would rather have iOS. MacOS/ARM might happen though.
        f) I’m sure the opportunity to sell millions of unit at their beloved margin levels is making them think twice.
        g) well, depends on whether you’re talking about Win8/x86 or Win8/ARM.The x86 version will have battery life issues for the foreseeable future, but the Win8/ARM, as long as it gets Office, will make a killing. Most people around me with personal laptops that they also use for work (as opposed to locked work-supplied, or purely leisure laptops) want a tablet and need Office.

      • vhs

        MacOSX on ARM makes a whole lot of sense under the following circumstances:
        – There are high-end 64-bit ARM CPUs (coming soon)
        – There is a high-powered, non-mobile, large-screen iOS device (which I predict is soming sooner or later)
        – OSX is run as an App on said device, with support for BT Mice and keyboards
        – OSX/ARM emulates intel user-space code and maps system calls and AppKit calls to native ARM calls

        I don’t think we’ll habe to wait longer than four years for that, as it’s pretty obvious.

      • Anonymous

        MacOSX on ARM is a STUPID STUPID STUPID idea. It’s an idea promoted by people who have never programmed a day in their life, who have no idea what the differences in capabilities between different CPUs are.
        Let it go.

        Intel makes the best combination of low-power with high performance CPU for the desktop/laptop market. That is a fact. No-one else is close. IBM care only about the very high end. AMD are unable to reach the low power of Intel CPUs, or their high performance.
        ARM performance is not in the same league, and never will be — they are targeting something different.

        Does it matter? Don’t people only use their computers for watching movies and browsing the internet?
        The problem with this theory is that if Apple lock themselves into a low-performance computing model, they are stuck there — forever! The guy at college thinking about some cool new way to extract 3D models from video — he’s not going to be doing that work on a mac, because macs are low performance. The guy working on cool new AI technology — he’s going to sell his Siri killer as a Windows and Linux product because he needs performance that mac, with its crappy 1/10th the speed of Ivy Bridge CPU doesn’t offer. Likewise good voice synthesis. Likewise improved image recognition. etc etc.
        Consider for example, Lytro. They came out with the app for their camera on mac FIRST. If Mac had a crappy, ridiculously slow CPU compared to Windows, that would not have happened. They wouldn’t have wasted their time developing algorithms and writing code on a slow computer, and theyw ouldn’t have made their product look bad by having it ship with a slow app when they could have it ship with a much faster app.
        Likewise, if Steve Wolfram ever adopts my ideas for renting (rather than selling) Mathematica, with a really low-price home edition for K-12 students, I guess all those families will be buying Windows PCs, because no-one wants to run Mathematica on ARM.

        Basically, claiming ARM is good enough is claiming that computing has stopped — from now on, we’re never going to do anything more that we do today. This seems a rather, *short-sighted*, shall we say, attitude.

      • Anonymous

        You are making enormous assumptions about the future of computation.

        You are assuming that OSes will be limited to a single hardware platform, when the trend strongly suggests otherwise. OS-X hasn’t been defined by the CPU it runs on, but by the UI paradigm it operates under.

        You are assuming that because consumers have needed increased CPU power in the past that this will continue indefinitely. In fact the enormous growth in the iPad and the MacBook Air demonstrates that consumers are now more interested in other kinds of performance such as portability and battery life.

        You are assuming that computation must be local, when we are seeing more and more work being done in the cloud. Wolfram could easily offer Mathematica as a cloud based subscription for example, as it has long had a client/server architecture. Gaming is already making tentative steps to the cloud.

        Many of us who have been programming for decades don’t make the same assumptions that you do.

      • Anonymous

        “In fact the enormous growth in the iPad and the MacBook Air demonstrates that consumers are now more interested in other kinds of performance such as portability and battery life.

        I think this is a wrong-headed way of looking at the issue. The issue is NOT “what do I have to compromise on for my ONE computing device”, it is “what collection of computers best serves my needs”. iPhone and iPad serve the “keep in my pocket, and carry in my backpack” needs well. But they serve those well BECAUSE they are auxiliary computers.

        I know some people think an iPad is a feasible “only” computer. Personally I think these people are insane — they are the 2011 version of the people in 2008 telling us that an Eee PC was a great “only” computer — they are obsessed with “solving” a problem that doesn’t exist.

        OK, so if I am going to have multiple computers, the whole POINT of this is to have different compromises. The portability/battery compromise is of very little interest when I consider my HTPC or my iMac. Are you willing to agree that an ARM iMac makes no sense? Or are you convinced that, sure, Winterms and XTerms have been a failure for thirty years now, but, just wait, they are about to take off…

        And if I have an Intel iMac, why do I want an ARM MBA? The iMac and MBA share the keyboard+trackpad paradigm — I want them to share apps. Network communication, especially wireless, is always going to lag far far behind CPU performance, meaning I don’t want my apps to feel sluggish (or not even work) because the cell tower is overloaded/not available.
        If anything, I see computation becoming more local. If I were at Apple, I’d be thinking how to make Siri better. Siri today is slow — let’s not pretend otherwise. It’s slow because most of the heavy lifting is actually done on the local core — there isn’t some shuffling of an audio waveform over the network with every Siri request. One thing Apple COULD do is offload work to your macs in the area if they exist — wake them up via the network, send the waveform via WiFi, and the get results back from them 10x as fast as doing the job locally.

      • http://twitter.com/Marcos_El_Malo Marcos_El_Malo

        Word is that Apple already has Mac OS X running on ARM as a skunkworks project (just as they had it running on Intel during the PowerPC days).

        I don’t know what Apple will eventually do, but seeing as how 74% of their PC sales are notebooks, Apple is clearly interested in low power CPUs, like ARM.

      • Anonymous

        Of course they do. And every year, they show Intel and demand lower power and better prices.

        So far Intel has delivered, and I expect them to continue to do so. ARM makes a great product for its market. AND Intel makes a great product for IT’S market.

      • Davel

        Actually at one time AMD made cpu’s that were both lower power and higher function.

        Intel eventually copied AMD and used the monopoly power to price them out of business. On an even playing field the world may be different. What intel has done for a very long time is have the best manufacturing process in the world. The best yields and the best process technology.

        AMD is no longer a threat, but that was not always the case.

      • http://kaizenity.blogspot.com/ FalKirk

        “(W)hat Apple has said is: ‘We don’t know how to build a sub-$500 computer that is not a piece of junk’… (s)ignificant lowering the bill of materials by going ARM instead of x86 might help them with that.”-obarthelemy

        Obarthelemy, your quote is quite right but I believe that they conclusion you draw is quite wrong. I believe that the iPad was, and is, Apple’s answer to how one builds a sub-$500 computer that is not a piece of junk. Apple has no interest in building a netbook, no interest in building a lower cost notebook.

        Apple doesn’t think in terms of products. They think in terms of categories or industries. Apple didn’t try to build a better MP3 player. They tried to build a better music player. Apple didn’t try to build a better phone. They tried to create a better pocket computer. And Apple is not trying to build a better netbook. For Apple, the question is, “How do we bring an Apple quality computing product to consumers for only 500 dollars?” And the iPad is their answer.

    • Asymco Reader

      There is no fragmentation, and they should be “disconnected”. iOS and Mac OS X are the same underlying operating system as I understand it. The difference is in the user interface frameworks. From the user’s standpoint they are two different systems and rightly so because they use a different user interface. iOS apps don’t run on a Mac not because it would be difficult to port them (in fact it likely would be trivial), but because it would be cumbersome to operate an iOS application with a mouse or trackpad. The reason the iPad succeeded where the tablet PCs failed is because iOS was written simply and specifically for touch and not a shoehorned mouse-turned-stylius desktop operating system. The only way iOS apps will find traction on laptops and desktops is with touch screens on those platforms, but that’s not an ergonomic use case and also likely to be a tiny market if any.

      At least that’s my thinking.

      • http://www.smartlevers.com Rukesh Patel

        Check the Mac AppStore lately? There’s a lot of iOS ports there (esp games & utilities)… and the vice versa also happens, of course.

    • Davel

      To be technical, the operating code for the cpu’s are different so the apps won’t work on each. But the question is who cares? The interface is different.

      Sitting in front of a pc do you really want to by pointing and swiping? I believe Jobs made that point some place. I am sure Apple is very clear about what works and what does not on the form factors.

      Apple is looking to merge back elements of iOS back into its desktop, but probably not the way you are thinking of.

      Also I have read that it is not just the interface that is different. Remember the memory/storage of a phone or tablet is not what is available on the desktop. So they probably did major surgery to the kernel to get it to run.

      Additionally with the cloud they are implementing you don’t really need the same app running on both. What you need is applications that have the same functionality and similar navigation that can share data. It is the portability of the information and function that is important.

      To more directly answer your point, Apple can make MacOS run on ARM, if they do what do you do with legacy apps? What do you do with the graphics systems that require very high function graphics, integer, floating point and memory bandwidth?

      • Anonymous

        Very true. My point is ARM’s power would be sufficient for most desktop/laptop users (except non-casual gamers and power users), so ARM-based laptops and desktops are bound to happen. Actually, I’m using a $150 Hercules eCafé netbook right now (well, misusing it as a Torrent/NAS/DLNA server, rather), with my eye on a $35 Raspberry Pi Model B (700MHz, 256 Megs, 1 Watt) to replace it and maybe another one to take over my desktop’s second screen.
        The main issue is software. Downscaling a “classical” OS (MacOS, Windows) seems a no-go because those come with lots of functions that would be superfluous for those uses, and because all software would need to be at least recompiled, and more commonly at least partly rewritten, thus creating another platform.
        It seems much smarter to try and build up from a mobile OS. That does imply some UI issues, especially non-touch input and screen sizes. I’m fairly sure those can be solved, and that would allow software to work in both situations, avoid creating fragmentation and multiplying platforms. Android 4 is making a valiant effort at transparently supporting widely varying screen sizes, and a range of input options. We’ll sson see how well that works on the likes of the Asus eeePad Transformer.
        MS is going the “new platform” route with Windows 8/ARM. We’ll see how that pans out, and MS has a killer app (Office) that other platforms don’t, so results will be skewed.

      • http://twitter.com/Marcos_El_Malo Marcos_El_Malo

        Sitting in front of a pc do you really want to by pointing and swiping?

        I find myself trying to do this on my girlfriend’s lap top all the time now. She thinks it’s funny.

  • http://twitter.com/MacsFuture MacsFuture

    Apple lost out in the mid 1980s and 1990s for one big reason. IBM, which had historically dominated enterprise computing and equipment, entered the PC business with the first PC. So, although Apple was the first popular personal computer, IBM had the muscle to crack the enterprise space. Microsoft went along for the ride and then took over the domination of Enterprise because IBM totally goofed and allowed MSFT to own and license MS-Dos to other manufacturers. IBM didn’t think that was a threat as IBM didn’t think that anyone could reverse engineer the IBM PC. VC money poured into a venture called Compaq that reversed engineered the IBM PC, MSFT provided the operating system MS-DOS, and the clones started pitching their IBM clones to businesses. Once MSFT had saturated the enterprise with IBM PCS and IBM clones, Apple was screwed in the non-Enterprise business. Back then most peoples first use of any computer was at work, in the enterprise. Once they because familiar with MSFT operating systems at work, they wanted the same at home. Remember, back then Mac operating systems and files were not really compatible with MSFT-PC files. So everyday people purchased PCs or PC clones at home because they wanted something like what they had at work. And also, because there was much more software available on the PC, many consumers forewent the Mac because there was less software, particularly in the gaming area. I wasn’t able to convince friends of mine to switch to a Mac until around 2005 when compatibility between PC and Mac files was no longer a real issue.

    Now we are seeing the reverse, consumers are adopting Apple products, i.e. the iPhone and IPad, in mass, and that is putting pressure on Enterprise to adopted these products in the work space. One threat to Apple is really not from Android, but from MSFT. If Enterprise embraces Windows 8 tablets and devices next year when Windows 8 comes out, that may cause consumers to purchase Windows 8 devices in their personal life. Android is not as much a threat as enterprise is less likely to embrace Android than Apple. But MSFT still is dominant in many IT departments and if Windows 8 takes off in the enterprise that could pose a threat to Apple’s iPad and iPhone growth.

    • Anonymous

      From what I understand, iOS already handles enterprise email pretty well, and there are solutions for working on word-processing and excel files. Given that, I don’t think the enterprise market has the influence it once had over the home market. The mac, I suspect, has already profited from this. In fact, from what I’ve seen it seems the influence now tends to work in the opposite direction, with people more often working from home and so demanding solutions based on what they already own. And that goes doubly so with mobile phones as employees all have their own and generally hate to carry a company-provided second. I think many companies saw the iPhone as a fait accompli before they had much time to react. Still, I think MSFT does still have that one last enterprise card to play, so it could prove interesting.

      • Alan

        I agree – the card they can play is true MS Office software. I’ve tried QuickOffice and DocsToGo and they work pretty well for Word and Powerpoint docs but they only open simple Excel spreadsheets. (I probably haven’t tried any non-simple Word and PP docs so maybe they don’t work so well for those either). Almost every business uses Excel heavily including VB scripting which is typically not handled in “other” spreadsheets. So I expect MS tablets to have a market in the enterprise when they arrive.

      • Anonymous

        That’s a card that they can play for home users but I don’t think it’s a significant problem in enterprise. Enterprise is increasingly moving such things into Citrix anyway.

    • http://nmuppala.wordpress.com Nalini Kumar Muppala

      “92% of the Fortune 500 companies are testing or deploying iPad. It is unheard of.” – Oct 4th 2011, Apple event.

    • Anonymous

      Cool – Someone accurately depicts history – Most attribute Apple’s small share to not licensing their OS. Nope, IBM WAS business computing and businesses were the ones who bought most computers.
      One nit – If I recall correctly,iIt was Phoenix Systems that reverse engineered the BIOS and that allowed the clones like Compaq to do their thing. The BIOS was one of the very few proprietary things in an IBM PC.

    • http://kaizenity.blogspot.com/ FalKirk

      “(E)veryday people purchased PCs or PC clones at home because they wanted something like what they had at work….Now we are seeing the reverse, consumers are adopting Apple products, i.e. the iPhone and IPad, in mass, and that is putting pressure on Enterprise to adopted these products in the work space.-MacsFuture

      Nice recap, MacsFuture. The other day I was listening to an analyst explain how the consumerization of Enterprise got started and its effect on IT departments. As he talked, he emphasized how products and services like the iPhone, App Store and iPad had led to a consumer revolt. Consumers found that they had far better computing devices at home than they did at work and they weren’t going to stand for it anymore. They started the coup, at first, by bringing their personally owned devices to work and they ended the revolution by demanding that IT departments supply them with these easier to use and more efficient devices.

      As I listened, I suddenly realized – perhaps belatedly – that it wasn’t the consumerization of Enterprise that was happening but the Appleization of Enterprise. Yeah sure, other consumer devices were coming along for the ride, but in each case it was Apple who had broken down the door and stormed the IT castle.

      My admiration for Steve Jobs as a businessman knows no bounds. I believe that he helped kick start the computer revolution with the Apple II, revolutionized computing with the Macintosh, disrupted the movie industry with Pixar, reinvigorated Apple with the NeXT OS which was the foundation for OS X that Apple still uses to this day, reinvented the music industry with the one-two punch of the iPod and iTunes, rocketed to the top of the retail sales, reinvented phones with the one-two punch of the iPhone and the App Store, and revolutionized – perhaps for the third time – the computer industry with the introduction of the iPad.

      But now I look with renewed awe at the consumerization (really the Appleization) of the Enterprise. The consumerization of the Enterprise will not revolutionize nor even reinvent business. But it will send ripple effects through the whole of the business sector as it makes workers and business more efficient and more effective.

      I ask you, how great is that?

      • Robert

        It’s insanely great, obviously.

      • http://kaizenity.blogspot.com/ FalKirk

        Exactly right! What was I thinking? :)

    • Anonymous

      AFAICT, Windows 8 Tablets will be ARM-based for the first few years (starting late 2012).

      Windows 8 on ARM will not run any of the Windows 8 desktop apps.

      I doubt that we will see Word, Excel, PowerPoint, etc. rewritten to run on ARM Windows 8 tablets. Rather, I suspect that Windows ARM tablets will access these apps from the cloud.

      In addition, Windows 8 developers have no facilities to help migrate 3rd-party desktop apps to Windows 8 ARM apps.

      By contrast, currently, the entire suite of iWork desktop apps have [very] similar versions that run entirely on the iPad (and are largely compatible with Office). In addition iMovie runs entirely on the iPad.

      Here, I believe, Apple has a significant advantage — Apple has two very similar variants of a single OS running on the x386 desktop and the mobile iDevices.

      The two OS variants have a common development environment and [where it makes sense] common APIs for developers.

      I suspect that Microsoft is awaiting low-power Intel chips to run on their tablets — as they appear to have no plans (or means) to migrate Windows 8 desktop apps to ARM tablets.

      That could give Apple an insurmountable 3-4 year lead.

      • http://twitter.com/shameermulji Shameer Mulji

        This is not entirely correct. If a developer writes an app that’s a native Windows 8 app, that app will run on all windows 8 pc’s, be it Intel or ARM pc’s.

        Legacy Windows apps, meaning apps written for Windows 7 and prior, won’t run on ARM-based Windows 8 tablets / computers but will run on Intel-based Windows 8 tablets / computers.

        So MS does have a unified development platform for Windows 8 and there is a ton of developer excitement behind it. Also add that MS developer tools are considered to be the best in the world in terms of power & ease of use.

        My guess is that, beginning with OSX Lion, Apple will get there as well. But they also need to put much more work in improving their developer tools along the way.

        Another thing you have to look at is MS still has the #1 killer app for any platform – MS Office. Next to Windows, Office is the most widely used application bar none. Approximately 1 billion people use it. That alone will make people gravitate towards Windows 8 – be it on a tablet or desktop. There is no office productivity app on any platform that’s anywhere near as good as MS Office, not Office for Mac 2011 or Apple iWork.

      • Anonymous

        “Also add that MS developer tools are considered to be the best in the world in terms of power & ease of use.”

        That’s what Windows developers will say, but Xcode is extremely powerful and easy to use and much more cohesive and unified than Windows’ development environments.

    • Davel

      @macsfuture

      Actually IBM was not the first pc. They may have coined the term in the product, but there were other personal computers before IBM.

      In regards to Apple’s pc business, Jobs killed the very successful Apple 2 line making their customers not to pleased in favor of the Mac. Additionally the Mac was very expensive. It also lacked many things not the least of which was expandability.

      The phone is different. Initially it had a very high price. Apple was sensitive to the criticisms and brought the price down to what others were selling, but offered a superior product for the price. If Apple kept the 600 price tag I wonder what the market would be like now.

      Essentially with the advent of the iPod, it’s products may be expensive, but not out of reach. This allows customers to aspire to Apple products and get them rather than get something else.

      • http://twitter.com/Marcos_El_Malo Marcos_El_Malo

        Their first micro-computer product, based on the Intel 8088 chip, was called the IBM PC. At the time, I remember the term micro-computer being used more than personal computer. I don’t think IBM coined the term, but they certainly popularized it.

  • MattF

    Another way of putting it is that the iPad has both the ‘best in class’ and the ‘good enough’ markets in tablets all to itself, while the iPhone owns the smartphone ‘best in class’ market, but Android has the ‘good enough’ market.

  • The CW

    Apple’s strategy, in PCs and in smartphones, should not be to eliminate the competition… leaving them zero marketshare. The strategy should be to leave them the part of the market that sucks. Let their competitors have, perhaps, a greater marketshare but a share that offers no advantage in profits, advertising demographics, or loyalty.

    So far, so good.

    • http://www.asymco.com Horace Dediu

      This is quite profound. If one believes that every market includes desirable and undesirable segments, then the best strategy is to ensure you are in control of the desirable while ensuring that competitors are only drawn to the undesirable. The challenge is only to recognize what desirable means.

      • Eric D.

        It’s also critical if you want to keep the anti-trust divisions of the US Justice Department and the EEC off your back. Not having to worry too much about that actually increases your competitive advantage.

      • http://newcanuckworkshop.tumblr.com Junesoo Andrew Yang

        The strategic pattern was established with the iPod. John Gruber commented on this fundamental difference between Apple and Microsoft. For Apple, market share follows the product. For Microsoft the product follows market share. With the iPod, Apple has stabilized its market share at ~70%, but has no interest in pursuing the remaining 30% as it would likely require serious concessions to the iPod/iTunes design ethos.

      • Baxboy42

        Agreed. Market share domination is not something the DOJ has a chance to hange over Apple’s head w/things unfolding as they have. Actually, Apple has sufficient room to come back and grab Android market share without raising eyebrows. Android’s adoption rate from launch is on a much steeper trajectory than the iphone was from its start in 2007.

        Never thought of it as increasing your competitive advantage, but it gives one the abiltity to attack in anyway they see fit vs options in a more limited way. Perhaps this is the one thing keeps the competition down (not innovating but reacting) in the count all the time. They have so many pitches that they can throw, so you are clueless/guessing what’s coming down the pipe. I think Siri is going to be a curveball of sorts for the industry.

      • The CW

        I think that depends on which is important to you; profits, advertising demographics, customer loyalty, or sheer marketshare dominance. I can point to companies whose management define their criteria based on each of those in varying combinations of priority.

        As, I’m sure, can you.

    • Anonymous

      What’s interesting is that Apple didn’t take that approach in the PMP market, and seems to not be taking it in the tablet market – though it may be too early to tell there.

      I suspect that really Apple’s philosophy is a simpler one which covers both types of market – and that is simply never to ship a shoddy product. $150 smartphones and $200 computers are inevitably shoddy, whereas it was possible to build cheap PMPs that weren’t.

      One good example of this is the lack of LTE in the iPhone. The LTE slice of the smartphone market clearly doesn’t suck, however it is impossible to currently create an LTE product that meets Apple’s standards. Another is screen size. A 4.25inch iPhone would certainly be in a profitable segment but it would necessitate shoddiness of one kind or another either a non-retina display, or ugly aliasing on bitmaps, or at best some sort of Pentile solution providing a high enough logical resolution to be 3x the original iPhone.

      • http://pulse.yahoo.com/_OK42M52VJS2OAKNLPPQJ2YRJLU Tweedle

        While this is true, I think it’s equally true that Apple is shaping the new desirable/profitable/loyal segment of new markets — even if the iPad was introduced at competitive pricing, if iPhone lacks “high-end” features, or if iPod shuffles still exist.

        They are shaping the market so that their products are the most profitable, that their customers are the most desirable. Even if Apple is being “competitive” or whether or not Apple’s competitors want to be or can be under the umbrella that is the market that Apple “owns,” they ultimately move beneath the umbrella on purpose or are forced there by the dynamics of the market. Apple still ends up reaping the highest margins per product, most revenue per customer, highest loyalty, etc… as the market becomes mature.

        What’s really interesting is seeing Apple competitively push down into the low end WHILE achieving this “most desirable” market, creating an umbrella over the competition.

      • Davel

        In regards to LTE, Apple appears to value battery life. LTE will kill the battery so they are waiting to have good battery and LTE. Also LTE is young, they can afford to wait till the middle of next year to have LTE and NFC (maybe) in June.

        Screen size is different. They want to keep consistency with the graphics. They don’t want to Balkanize the screen so their partners apps are ugly.

      • http://twitter.com/Marcos_El_Malo Marcos_El_Malo

        Screensize: the reasons for staying with the 3.5″ are possibly due to supply/logistics, battery life (bigger screens need more power) and ergonomic.

        I’m sure it’s a combination, but I favor the ergonomic. It might be difficult to operate a phone with a 4″ screen with one hand for most people. 3.5″ might be the sweet spot for how far the thumb can reach when using with one hand. (I don’t remember the original article I read, but I saw this on Darling Furball.)

    • Baxboy42

      Very well said. Microsoft is/was the posterchild for this style of competition even though it jointly pursued the zero market share strategy, too. Same for Intel vs AMD in the past.

    • Anonymous

      I think you could paraphrase Steve’s quote of Wayne Gretzky:

      “Apple skates to where the $buck is going to be.”

  • Pingback: Tuesday links: purchase decisions | Abnormal Returns()

  • Sebi

    If think Apple can grow with iCloud more between the products. So someone who has an iPhone, would prefer an Mac, if the integration is getting better and better.

    Have you some charts or numbers how many iPhone user have an iPad or an Mac and how many Mac user have an iPhone or an iPad (and so on…)?

  • Pingback: Combined Mac and iOS shipments make Apple world’s second largest PC maker | Brian's Blog Site()

  • George Kraev

    Hi I have great respect for what you are trying to achieve with Asymco but there is a serious problem with your sources of information. Why would you take Gartner’s statistics for OS penetration on face value? I don’t know where they get their data from but I know for a fact that OS X has a lot higher than 5% penetration and if anything you can do your own calculations based on reported sales of PCs and Apple computers. Every single large computer manufacturer is a public company with fairly detailed financial reports and yet you have chosen to use someone elses calculations and this time they are clearly wrong.

    Correct me if I’m wrong, but wasn’t Asumco’s goal of providing analysis based on publicly available and verifiable data sources? There is nothing publicly available or verifiable about Gartner’s statistics even if they are a well respected company.

    • http://www.asymco.com Horace Dediu

      You’re right about the problem of accuracy. There are some other mitigating factors however.
      1. I don’t spend a lot of time on the PC market. I collect detailed first-hand data about the mobile market but not the PC market. To cover the PC market in detail would take another person. If you would like to take a run at it, I can help.
      2. Even if you get first-hand data from public reports from vendors, you can’t cover all of them. There is the data on “others” that you can never obtain as an individual. Without others, you can’t get the entire market and measure share.
      3. Gartner may not be accurate but their data is the most frequently cited. It also tends to closely follow IDC’s trends.
      4. Gartner does freely and consistently publish summary info which is what I use.

      I only track the PC market as a foil to the mobile market. It’s not as essential to me to get it perfect, but to observe trends.

    • http://nmuppala.wordpress.com Nalini Kumar Muppala

      Even the major Windows PC vendors do not report unit sales. GAAP does not require that they report unit sales.

      Apple seems to be the exception.