A year ago (and for several years before that), the Mac business was growing at a 20% to 50% clip. It was also rapidly gaining share in the personal computer market. It was a major factor in driving Apple’s stock price toward $200, and it was scaring the pants off the rest of the PC industry.
This quarter, Apple’s Mac business, measured by revenue, could shrink more than 10% year-over-year. And the company no longer appears to be gaining any share at all.
On Monday, Apple reacted to weak sales by cutting Mac notebook prices by 5% to 15%. That should help drive up Mac unit sales 5% year-over-year in June, Piper Jaffray analyst Gene Munster predicted in a note today.
That’s better than the overall 8% year-over-year June quarter unit sales decline that Wall Street expects, based on a slow April and May. And perhaps it’s the bottom for the Mac business, which declined 3% year-over-year in the March quarter. But it’s not enough to take the Mac business back to where it was.
Why not? Because many of the Mac growth drivers have stalled, and Apple shows no signs of addressing this. Specifically:
- Failure to launch exciting new products. (The MacBook Air was the last big hit.)
- Failure to play in the fastest growing segment of the market (netbooks).
- Weakness in core markets: Education and media/creative.
- Failure to make real inroads into the corporate world.
- Failure to build a big international business.
The recent price cuts may persuade some price-conscious consumers to pay up for a Mac. But they aren’t a game-changer, especially in this economy.
Apple can’t do anything about the economy. But it can do a lot to get its Mac business growing again. Here are the three biggest opportunities:
Enter more sectors of the PC industry (selectively). One of the fastest-growing segments is netbooks. Apple probably won’t release a traditional mini-laptop netbook — it hates them — but we expect the company to release some sort of multi-touch tablet that will compete with netbooks. (Apple’s market/pricing strategy will help determine its success here: Whether it decides to compete with sub-$600 netbooks, which are selling, or comes out with a $1,500 luxury tablet, which aren’t selling.)
Build a real corporate sales business. Several of Apple’s key corporate clients — the creative/advertising/media industries and education — have very small technology budgets right now. But there have to be many areas for potential growth, especially this fall, when Macs will natively support Microsoft’s (MSFT) Exchange email and calendar servers. We’ve also heard that Apple is hiring representatives for its retail stores that will help sell and support small and medium businesses nearby its stores. Companies are getting ready to decide what to do with their XP machines over the next few years: Buy new Windows 7 PCs or get Macs. Apple needs to make sure that many companies consider Macs.
Drive international growth. Most of Apple’s revenue still comes from the Americas and its U.S.-heavy retail business. But sales are growing faster overseas. So Apple should strengthen its marketing and brand internationally. A start: The company is building more retail stores abroad, including Paris, Italy, and Germany.
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