A curious thing happened to Apple last quarter: Seven years after launching the iPhone and four years after launching the iPad, Apple reported the best sales quarter ever for Mac. The belief that Apple would never sell as many Macs as it did during the first quarter of 2012 (known as “Peak Mac”) was busted. Tim Cook and Apple are as bullish as ever on Mac. I don’t think it’s a stretch to theorize that Mac’s resilience is born from the phones and tablets that many assumed would make the Mac irrelevant. As mobile devices continue to invade our culture, the Mac may find an attractive computing niche thanks to its special use cases and design.
Mac vs. Mobile Devices
Tim Cook spoke highly about the Mac a couple of weeks ago at WSJD, summing it up with “people love big screens”. It is that stark contrast to mobile devices that benefits the Mac as consumers have an easier time differentiating the uses cases between a Mac and mobile device. After the iPad was launched, consensus quickly settled on the iPad cannibalizing the Mac. Running with Apple’s stereotypical “cannibalization is good as long as one of our products is to blame” and a cursory glance at Apple’s 2013 quarterly results, which showed declining Mac sales, was enough for many to cast the Mac aside.
I even thought the “iPad will cannibalize the Mac” argument made sense as I owned an older 2008 Macbook, which was giving me a lot of trouble, and my new iPad 2 was occupying all of my attention. But as smartphone penetration grew, and more importantly, mobile device capability expanded, the Mac started to stand for something that a phone or tablet would never be able to bring to the table: a nice big screen. Compared to a 4.7-inch iPhone or an iPad, an 11-inch and 13-inch Macbook Air are more enjoyable to do various tasks and work, such as researching a topic or writing a report. A 27-inch iMac? Even better.
Fast forward a few years and I knew I needed a new computer so I bought a new iMac instead of an iPad Air because I had to do more writing and wanted a bigger screen for watching video. My Mac just cannibalized an iPad sale. I must not be alone as Mac unit sales have begun to stabilize and grew 21% year-over-year last quarter, aided by recent price cuts to MacBook Pro. Looking ahead, recent product updates should help continue year-over-year growth trends through 2015, highlighted by the grey bars in the following chart.
Mac is the Steady Ship to Mobile's Ebb and Flow
The Mac may also be benefitting from the continued ebb and flow of mobile devices. Consumers are still trying to decide what size of glass to carry in their pockets and soon on wrists. For some the trend is larger, embracing the 5.5-inch smartphone, for others the 4.7 and 4.0-inch form factor is best. Similarly with tablets, the iPad mini seemed to be the darling of the iPad line in 2013, but now looks increasingly likely to be discontinued with the iPad Air 2 as the best-selling iPad. All the while, the Mac’s large gorgeous screens have remained largely unchanged as its discovery phase occurred last decade. Consumers know what it's like using a Mac/PC. It's that comfort that can drive consistent upgrades through the years while our mobile devices continue to morph in order to find that perfect combination.
Design and Innovation
Instead of winding down Mac R&D, Apple continues to give the lineup the required attention and resources needed for continued evolutionary and revolutionary updates. Apple’s 2014 Mac lineup speaks volumes with a new Mac Pro , Mac mini, and retina iMac, along with solid updates to the rest of the Mac lineup. Has the Mac line ever been stronger?
Compared to other research budgets in Cupertino, the Mac simply doesn’t compare, but that’s not the point and instead a better comparison would be Mac’s R&D spend today to that from a few years ago. I would wager there hasn’t been much of a reduction. In some ways, Mac’s design is the number one reason that people choose a Mac over PC. While a larger screen and dedicated keyboard may be what gets a customer interested in Mac, the design often is what leads to the purchase button being pressed. Competitors realize this and miraculously their designs have begun to mirror that of Mac.
Mac’s Growing Niche and the Future
The Mac has found its niche. Apple will likely sell 200M+ iPhones, 60M+ iPads, and 20M Macs over the next four quarters. Twenty million units is not bad for a product that was supposed to be made irrelevant by mobile. Going forward, there are a few larger themes that will help when thinking about Mac.
- Apple will continue to work on lowering Mac prices, especially at the low-end of the lineup.
- The Mac’s differentiated software from iOS will be a selling point.
- Apple will continue to innovate with Mac where it matters (productivity and design).
I suspect there will be a few wildcards thrown into the mix, possibly as early as next year. An iPad Pro, which I discussed in more detail a few weeks ago in my "Thoughts on iPad" post, may be unveiled (think iPad Air but with a 12.9-inch display and possibly new software features and accessories). Such a device would represent Apple’s response to softening iPad sales in the face of larger smartphones and Mac's resiliency. Looking further out I wouldn’t be surprised if Apple tracks how a larger iPad sells in comparison to the Mac line and then uses that information to decide if it is time to rethink both the Mac and iPad lines and if there is some kind of new device that would take the best features of iPad and Mac while not adding new friction points. In addition, Chromebooks in education deserve to be mentioned but at this point I still see Chromebooks more as a threat to Windows machines than the Mac. Many school districts like Chromebooks because of their low costs, placing them in a different target market than the Mac.
As Steve Jobs said, “If you do something and it turns out pretty good, then you should go do something else wonderful, not dwell on it for too long. Just figure out what's next." For Apple, the Mac has been great and I’m sure they are busy on making it even better.