Help, Guides, and News on making the Switch To Apple Macintosh Computers
Here's the real story folks, Apple's market share is not declining. In fact, it's on a dramtic upswing. In fact, it's up 24.4 percent year-over-year from August 2005 to August 2006. Data used in this report has been obtained from NetApplications via Market Share.
- Up 27 percent since January 2005
- Up 23 percent since April 2005 (Mac OS X Tiger launched April 29, 2005)
- Up 2.9 percent January to August 2006 - despite Intel transition
Let's start by looking at Apple's market share month by month for calender year 2005. You can click on each image to get a larger view.
As you can see, the data fluctuates. 2005 was an year of change for Apple as the company undertook two major transitions. The first occured in April when Apple launched Mac OS X Tiger 10.4 on April 29, 2005. The event marked the company transitioning it's operating system from Mac OS X Panther 10.3. Then came the shocker at the World Wide Developers Conference (WWDC) on June 6, 2005. Apple CEO Steve Jobs announced that the company would transition the company's Macintosh computers to Intel processors. Despite those events, Apple continued to see market share gains from July to the end of the year. Apple released revised Macintosh computers in July and October 2005, more on those updates a bit later.
What I'd like to point out is that the November 2005 and December 2005 data appear to be anomalies. Let's delve into the data to see why. The data shows that Apple's operating system market share increased 6.2% between October and November and increased 5.84% November and December. This corresponds to a 12.4% increase from October 2005 to December 2005. The data points need to be questioned as we look at the January 2006 data. The January market share comes in at 4.21%. If true, that would represent a 3.22% decline from December 2005. What? How could Apple's market share rise 12.4% in two months and then decline by 3.2% in the month after the conclusion of the 2005 holiday buying season. A bit strange huh?
The data doesn't appear logical because the majority of Macs purchased in December 2005 (during the 2005 holiday season) would ultimately show up in the January 2006 numbers. As with all public companies, Apple operates on a quarterly basis. But note that Apple's fiscal quarters do not correspond to the four quarters in a given calender year. Apple's fiscal quarters roughly run as follows:
- Q1 - October, November, December
- Q2 - January, Febuary, March
- Q3 - April, May, June
- Q4 - July, August, September
Apple had a blow out December 2005 quarter (October, November, December). The quarter is referred to as Apple Q1 2006. Apple exceeded expectations set forth by numerous Wall Street analysts and investment firms. Here are some snips from posts on this site relating to the December 2005 quarter:
Apple Sales Exceed Expectations - Posted January 10, 2006
Apple Computer Inc. Chief Executive Steve Jobs stated at Macworld 2006 that sales for Apple's December quarter exceeded expectations on strong demand for the company's iPod music players. Revenue for the quater came in at $5.7 billion, well above the $5.04 billion average estimate of analysts. In addition, the company's retail stores posted revenue of more than $1 billion for the first time in their history. Shares soared to a record high following the announcement.
Apple Q1 2006 Earnings and Conference Call - Posted January 19, 2006
Apple sold 1.24 million Macintosh computers during the quarter comprising 667,000 desktops and 587,000 notebooks/laptops, figures up 20 percent from the year earlier period. Notebook sales accounted for $812M in revenue, up 34 percent from the same quarter last year. Desktop sales accounted for $912M in revenue, down 9 percent. Overall, Macintosh computer sales accounted for 41 percent of the company's total revenue in the quarter.
The key statement from the first post is that Apple retail stores posted their highest ever revenue during that quarter. With respect to the second post, how can a 20 percent increase in Mac unit sales (when compared to Q1 2005) result in a net decline in market share in January 2006? If the data is accurate, that would mean that there was either a net decline in Mac units at the end of January 2006 when compared to the end of December 2005 or, other operating systems grew market share. It's already been shown that Mac unit sales grew by 20 percent for the December 2005 quarter. This can be explained by Macintosh updates that were announced during the 2005 December quarter:
October 12, 2005
October 19, 2005
Although the iMac was announced on October 12, they became available the following week. The 2.0 GHz and 2.3 GHz Power Mac G5 Dual were available on October 19 but the 2.5 GHz Power Mac G5 Quad became available in early November. The PowerBooks were available on October 19, the day they were announced. So, there were updates to three of Apple's Mac lines whereas the Mac mini and iBook models were last revised on July 26, 2005. Furthermore, we know that most holiday purchases are made in December, not October or November. Hence, it's logical to conclude that the majority of those 1.24 million Macs were likely sold starting at the end of November and thoughout the month of December. Henceforth, a significant percentage of those systems should show up in the January 2006 numbers as many would have been opened after the holidays. Overall, the January 2006 data doesn't stack up.
To analyze it from a different perspective, let's look at the market share of other operating systems. Windows (XP, 2000, 98, ME, NT, 95) market share increased from 95.21 percent in December 2005 to 95.52 percent in January 2006, corresponding to a 0.32 percent increase over the period. All other operating systems (Linux, Web TV, CE, PSP, HipTop, Sun, FreeBSD) accounted for 0.39 percent in December 2005 and 0.39 percent in January 2006, no growth! Hence, the data that shows Mac OS decline between December 2005 and January 2006 is suspect. In my view, the Mac OS market share data for November 2005 and December 2005 data are probably overstated. Further insight is provided in the 2006 data.
The following is a look at Apple's Mac OS market share month by month for calender year 2006 up to August 2006. What many have missed in their reporting this week is that Market Share now reports Mac operating system stats into two groups, Mac OS and MacIntel. For example, here's the Mac OS data for the month of June 2006. Note the two listings, the first is Mac OS then a bit lower is MacIntel. When the numbers are combined, here's what we get (click on the images for a larger view):
Between January 2006 and April 2006, the Mac OS market share grew for three straight months. These increases occured during a period of growing popularity, momentum, widening acceptance of the Macintosh and most importantly, the announcement of the first Intel-based Macintosh computers, the iMac and MacBook Pro on January 10, 2006. The iMac began shipping in January followed by February shipments of pre-orders of the MacBook Pro. There was pentup demand followed by a buying frenzy for the Intel based Macs. So if the first Intel based Macs began shipping in January (iMac) and there was a solid December 2005 quarter, how did the January 2006 market share decline? This places further questions on the accuracy of the December 2005 data.
What's more important is the year-over-year increase in Mac market share between 2006 and 2005. As you can see above, the Mac OS operating system has been experiencing at least 23.5 percent year-over-year growth each month for the past year. It peaked in March at 28.2 percent and dipped to 23.8 percent in May. The May comparison can be attributed to the late April 2005 release of Mac OS X Tiger. Without a comparible operating system launch for May 2006, the comparison appears below trend.
Febuary's market share increase can be attributed to strengthening iMac sales and MacBook Pro shipments that initiated on February 14, 2006 (note that Apple began accepting orders for the MacBook Pro in January). March's increase can be attributed to the iMac, MacBook Pro, and the Febuary 28 release of the Intel-based Mac mini. April's increase can be attributed to additional sales of Intel-based Macs and the April 5, 2006 announcement of Boot Camp which ultimately made Intel-based Macs more appealing to Window users and potential switchers.
In my view, the decline in May's market share and year over year growth can be explained by two factors. The first factor is the the May 16, 2006 announcement of the iBook replacement, the MacBook and the second, the April 29, 2005 launch of Mac OS Tiger. The fact that the MacBook was announced mid month can help explain May's decline. Ever since January 2006, many buyers held out on purchasing an iBook because they anticipated an Intel-based replacement. iBook levels had dimished by April and rumors were rampant for several weeks that a "MacBook" replacement of the iBook was imminent. Hence, May Mac unit sales were effected. The May comparison can also be attributed to the late April 2005 release of Mac OS X Tiger. Without a comparible operating system launch for May 2006, the year-to-year comparison is below the trend average.
Although June's monthly market share change was negative, the year-over-year comparison was up 25.1 percent. July marked the return to market share growth. The true test will be the data for the remainder of 2006 and early into 2007. I'm eager to analyze the November 2006, December 2006, and January 2007 year-to-year comparson to determine how the data points compare to their corresponding prior year data.
The August 2006 announcements of the Mac Pro and Intel based Xserv marked the completion of the Macintosh PowerPC to Intel transition. Since that time, buyers have been quick to purchase Mac Pro systems, a stark contrast to previous periods throughout 2006. The relucatance to purchase iBooks, Mac minis, and PowerMacs can help to explain the fluctuations in the 2006 data. What's more important is the data from the July 2006 period onward.
We can also gain insight into Apple's prior earning announcements this year.
- Q2 2006 - April 20, 2006
Shipments of 1,112,000 Macintosh computers accounted for $1.572B in revenue, a 4 percent increase in units and a 5 percent increase in revenue when compared to the year-ago quarter
- Q3 2006 - July 19, 2006
Shipments of 1,327,000 Macintosh computers, a 12 percent increase in units compared to the year-ago quarter (2005) and up from the 1,112,000 sold last quarter (Q2 2006)
I expect the Q4 2006 earnings to demonstrate further Macintosh unit sale growth but to an extent that will blow away market and analysts expectations. Throughout various posts on this site, I have stated that I expect Apple to expand it's market share. In a January 11, 2006 article titled "Apple Intel and Increased Market Share", I stated that the Apple's switch to Intel processors would ultimately result in market share gains for Apple. I also stated:
"The new Macs will usher in a new wave of Switchers. I predict that Apple will gain significant market share on a percentage basis in 2006 whereas Microsoft will see a slight decline."
Use the following to view the market share for all tracked browsers:
Up to the August 2006 data, the prediction has come true. Apple has experienced a 2.9 percent market share growth during 2006, Microsoft has experienced a decline of 0.3 percent (95.38 percent in January 2006 versus 95.08 percent in August 2006). Futhermore, I've stated that 2007 will be a year to remember for Apple. In a post on April 7, 2006 titled "Macs - Boot Camp - Market Share - Switchers" I predicted that Apple will have an 8 percent market share in the personal computer market by the end of the OS X 10.5 Leopard lifecycle. We'll just have to wait until the successor to Leopard is released to see if the prediction comes true.
This post demonstrated that Apple's market share is on a dramatic upswing with growth of greater than 23.5 percent each month over the past year. Apple will continue to experience market share gains for the remainder of 2006 and beyond. The future is bright for the Apple's Macintosh and the OS X operating system. Apple has just embarked on a multi-year expansion that will see the company continue to grab market share.Updates
For those who doubt the analysis presented in the article, be sure to read some supporting evidence from W3C. According to their data Mac OS X is indeed posting huge gains in market share. Furthermore, their August year over year data for 2005 and 2006 also show an increase of 24 percent. Although the data varies with respect the NetApplications/Market Share, the percent increase are in agreement. This provides validation to the data and analysis presented in our article.
Accroding to the W3C data, Mac OS had a market share of 2.9 percent in August 2005 whereas in August 2006 the percentage was 3.6 percent. The math to determine the year-over-year growth comes to 24.1 percent. Furthermore, their September 2006 to 2005 comparison comes in with growth of 22.6 percent.
Be sure to scroll to the bottom of the page and look for the section "OS Platform Statistics"
September 21, 2006
- Added supporting evidence from WC3