In Apple's most recent fiscal year ended in September, the company's Macintosh line of personal computers generated revenue of $21.783 billion, representing 20.12% of Apple's $108.249 billion in reported revenue. The Mac's $4.304 billion gain in revenue during the fiscal year represented 10% of Apple's $43 billion in revenue growth.
Although the $21.783 billion in revenue generated from Mac sales in FY 2011 represented only 20.12% of the company's revenue total, it exceeded Apple's total reported revenue of $19.315 billion in FY 2006, just five years before. In FY 2011, revenue generated from Mac sales exceeded the revenue generated from iPad sales by $1.425 billion.
Apple's Unrelenting Mac Attack On The PC Market
The graphs and table data in this article illustrate and delineate Apple's unrelenting Mac attack on the PC market. For over five consecutive years the rate of growth in Mac unit sales has exceeded the rate of unit sales growth for the PC industry as a whole. In only one quarter of the most recent twelve fiscal quarters has Apple experienced a year-over-year unit sales decline. In FY 2011 Macintosh unit sales rose about 22.5% to 16.735 million units following a 31% rise in unit sales in FY 2010.
In the current quarter ending in December, Macintosh unit sales may reach 5 million units for the first time in the company's history, breaking the unit sales record of 4.894 million units sold in the recent September quarter.
Desktop | Portable | Combined | Desktop | Portable | Total | |
Quarter | Units | Units | Mac Units | Dollars | Dollars | Dollars |
FQ1 '09 | 728,000 | 1,796,000 | 2,524,000 | 1,045,000,000 | 2,520,000,000 | 3,565,000,000 |
FQ2 ’09 | 818,000 | 1,398,000 | 2,216,000 | 1,056,000,000 | 1,904,000,000 | 2,960,000,000 |
FQ3 ’09 | 849,000 | 1,754,000 | 2,603,000 | 1,134,000,000 | 2,220,000,000 | 3,354,000,000 |
FQ4 ’09 | 787,000 | 2,266,000 | 3,053,000 | 1,089,000,000 | 2,891,000,000 | 3,980,000,000 |
FQ1 ’10 | 1,234,000 | 2,128,000 | 3,362,000 | 1,692,000,000 | 2,758,000,000 | 4,450,000,000 |
FQ2 ’10 | 1,147,000 | 1,796,000 | 2,943,000 | 1,532,000,000 | 2,228,000,000 | 3,760,000,000 |
FQ3 ’10 | 1,004,000 | 2,468,000 | 3,472,000 | 1,301,000,000 | 3,098,000,000 | 4,399,000,000 |
FQ4 ’10 | 1,242,000 | 2,643,000 | 3,885,000 | 1,676,000,000 | 3,194,000,000 | 4,870,000,000 |
FQ1 ’11 | 1,227,000 | 2,907,000 | 4,134,000 | 1,731,000,000 | 3,699,000,000 | 5,430,000,000 |
FQ2 ’11 | 1,009,000 | 2,751,000 | 3,760,000 | 1,441,000,000 | 3,535,000,000 | 4,976,000,000 |
FQ3 ’11 | 1,155,000 | 2,792,000 | 3,947,000 | 1,580,000,000 | 3,525,000,000 | 5,105,000,000 |
FQ4 ’11 | 1,278,000 | 3,616,000 | 4,894,000 | 1,687,000,000 | 4,585,000,000 | 6,272,000,000 |
Portables Versus Desktops
While it may come as no surprise the12.066 million portable Macs sold in FY 2011 represented 72% of all Macs sold, it may come as a surprise this unit sales record for portable Macs occurred in the same year Apple sold 32.394 million iPad devices. The graph below illustrates the rising influence of Mac portable sales in the product line's overall unit sales performance. In the recent September quarter, influenced by back-to-school purchases, portable Macs accounted for about 74% of the record 4.894 million unit sold.
The table data below details the sequential and year-over-year growth rates for Apple's desktop and portable Macintosh computers. Although portable Macs are clearly the most popular models, since FQ1 2010, Apple has sold over 1 million desktop Macs each quarter. The data published in this article is presented on a quarterly basis to demonstrate the consistent rise in Mac unit sales quarter after quarter. It's the quarterly sales growth that delivers the strong year-over-year unit sales gains.
Sequential | Sequential | Sequential | YOY | YOY | YOY | |
Quarter | Units Desktop | Units Portable | Total Units | Desktop | Portable | Total Units |
FQ1 '09 | -22.22% | 10.52% | -3.33% | -25.49% | 33.83% | 8.84% |
FQ2 ’09 | 12.36% | -22.16% | -12.20% | -4.44% | -2.44% | -3.19% |
FQ3 ’09 | 3.79% | 25.46% | 17.46% | -9.97% | 12.94% | 4.29% |
FQ4 ’09 | -7.30% | 29.19% | 17.29% | -15.92% | 35.28% | 16.93% |
FQ1 ’10 | 56.80% | -6.09% | 10.12% | 69.51% | 18.49% | 33.20% |
FQ2 ’10 | -7.05% | -15.60% | -12.46% | 40.22% | 28.47% | 32.81% |
FQ3 ’10 | -12.47% | 37.42% | 17.97% | 18.26% | 40.71% | 33.38% |
FQ4 ’10 | 23.71% | 7.09% | 11.90% | 57.81% | 16.64% | 27.25% |
FQ1 ’11 | -1.21% | 9.99% | 6.41% | -0.57% | 36.61% | 22.96% |
FQ2 ’11 | -17.77% | -5.37% | -9.05% | -12.03% | 53.17% | 27.76% |
FQ3 ’11 | 14.47% | 1.49% | 4.97% | 15.04% | 13.13% | 13.68% |
FQ4 ’11 | 10.65% | 29.51% | 23.99% | 2.90% | 36.81% | 25.97% |
Rising Unit Sales, Rising ASPs
In addition to strong unit sales growth, the average selling price of Macintosh personal computers rose in FY 2011. In the June conference call with analysts, management mentioned an increase in the revenue deferral on each device sold to represent the rights of Mac and iOS-based device buyers to use the company's iCloud services. As of June 6, 2011 Apple increased to $22 the revenue deferred on each Mac sold, an increase in the revenue deferred to $16 on each iPhone and iPad sold and to $11 the deferral on each iPod sold. Even with the increase in the amount deferred on each Mac sold since June 6, 2011, average selling prices on portable Macs improved year-over-year.
Apple's ability to maintain pricing control on Macintosh personal computers indicates unit sales growth and market share gains are occurring based on the strength of the product line and not due to price capitulation in order to increase sales.
The table below illustrates the way in which average selling prices for Macs in FY 2011 were relatively close to the average selling prices in FY 2009 no matter the fact portable Macs, on average, sell for less than desktop Macs and portables have increased in the percentage of units sold.
iPad Cannibalization?
In the June quarter conference call with analysts, Apple's management remarked on the fast adoption of the Apple iPad in the K-12 education market. In large part, the migration from Macs to iPads in that market was responsible for the lowered rate of Mac unit sales growth in the third fiscal quarter. But a recent report from Forrester Research as mentioned in Apple 2.0 suggests there's increasing appeal in the enterprise market for Macintosh computers and the rising popularity of iOS-based devices such as the Apple iPhone and Apple iPad may be increasing the line's consumer sales. Over the next few weeks I will be researching the impact of what I call the "Apple product mutual halo effect" in an effort to determine whether or not the presence of the iPad in the market is decreasing or increasing the rates of growth in Macintosh unit sales.
Conclusions
Apple has returned to the #3 spot among domestic PC makers and is gaining market share in both the domestic and global PC markets. Apple's unrelenting Mac attack on the PC market has created what will be a $25 billion revenue business in the company's current fiscal year. Continued Mac unit sales growth is essential to Apple's ability to sustain strong revenue and earnings growth over the next several quarters.
The Macintosh is Apple's most enduring product line and its performance can not be overlooked by investors and analysts even as the iPhone and iPad create much more news and generate more excitement among the world's consumers. The Mac remains essential to Apple's continuing revenue growth success.
Robert Paul Leitao
Disclosure: The author is long Apple shares.
