Let's Take A Look Back At The Mac's Performance

Let's Take A Look Back At The Mac

Today I'd like to close my recent series of posts analyzing Apple's results over the past eight fiscal quarters with a quick look back at the Mac. Apple's line of Macintosh personal computers has been the company's most enduring product line and for most years of the company's existence the product line most critical to the company's financial success. 

The Apple iPod, iPhone and iPad

Beginning in 2003, following the opening of the iTunes music store and the release of iTunes for Windows, the Apple iPod began to supplant the Macintosh as Apple's revenue and earnings driver. As recently as the first fiscal quarter of 2007, only four short years ago, the Apple iPod line of digital music players, iTunes music sales and iPod-related products represented 57% of Apple's reported revenue versus about 43% of revenue generated by the Macintosh line of personal computers and Macintosh-related peripherals and software. The iPod's success proved critical to Apple's ability to successfully complete what might be best described as an awkward transition from the PowerPC chip architecture to Intel chips. 

In late June of 2007, Apple released the original iPhone which further subordinated the revenue contribution from the Macintosh line and in April of this year the company released the Apple iPad. In Apple's most recent fiscal quarter, the fourth quarter of fiscal year 2010, the Apple iPod, iPhone, iPad and related product sales represented 70.5% of Apple's reported revenue, despite the fiscal year's 30% gain in Mac unit sales and 27% rise in unit sales in the quarter. Mac unit sales, software and peripherals represented 29.5% of the quarter's revenue results. 

The charts and associated table data below illustrate and indicate the Macintosh line's diminishing contribution to Apple's revenue totals while Macintosh unit sales continue to rise. Below the graphs we'll look at a few of the factors involved. 

			Mac	YOY		YOY		% of Reported
		Quarter	Units	Unit Growth	Revenue	Rev. Growth	ASP	Revenue
		FQ1 ’09	2,524	9%	3,554	0%	1,408	29.92%
		FQ2 ’09	2,216	-3%	2,945	-16%	1,329	32.42%
		FQ3 ’09	2,603	4%	3,329	-8%	1,279	34.20%
		FQ4 '09	3,053	17%	3,952	9%	1,294	32.37%
		FQ1 '10	3,362	33%	4,450	25%	1,324	28.37%
		FQ2 ’10	2,943	33%	3,760	27%	1,278	27.85%
		FQ3 ‘10	3,472	33%	4,399	31%	1,267	28.02%
		FQ4 ’10	3,885	27%	4,870	22%	1,254	23.94%

The Macintosh and Average Selling Prices

No one can reasonably dispute the recent unit sales success of Apple's Macintosh line of personal computers. As mentioned above and reflected in the table data, in fiscal year 2010 (ended in late September), Mac sales grew roughly 30% over the prior year period. However, over the most recent eight fiscal quarters the average selling price of Macintosh personal computers has fallen from $1,408 in the first quarter of fiscal year 2009 to $1,254 in the fourth quarter of fiscal year 2010. The graphs and table data include only Macintosh unit sales and revenue and do not include revenue from Macintosh-related products such as peripherals and software. 

Over the past eight fiscal quarters Apple has more aggressively priced Macintosh computers for the benefit of unit sales and a more competitive position in the global PC market. Average selling prices have declined for both desktop and laptop Macs. 

Record Mac Unit Sales, Record Mac Revenue

Despite the fall in the Mac's average selling price, the fourth quarter of fiscal year 2010 produced both record Mac sales of 3.885 million units and record Mac revenue of $4.870 billion.  In fiscal year 2010, revenue from Mac units sales of $17.479 billion exceeded Apple's total revenue from all sources of $13.931 billion in fiscal year 2005, and represented about a 70% rise in Mac unit sales revenue since fiscal year 2007, just three years ago. 

It's only in comparison to the success of Apple's iOS-based devices that the Mac's success can be in any way diminished. In fiscal year 2010, the Mac's unit sales revenue total of $17.479 billion dwarfed the $8.274 billion revenue contribution of the Apple iPod line. This revenue juxtaposition has been mostly ignored in Apple's emerging iPhone and iPad era. 

I will take a closer look at the Mac line's performance after the close of the current fiscal quarter. For an overview of Apple's revenue growth over the past five fiscal years, please  see last week's post titled Apple's Startling Rates of Growth: A Five-Year Overview. 

Graphs courtesy of Sandy Leitao

Robert Paul Leitao