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While they've been profitable in the PC space (laptops/desktops) to call them successful is a bit of stretch. They maintain =<10% of that market category which

While they've been profitable in the PC space (laptops/desktops) to call them successful is a bit of stretch. They maintain =<10% of that market category which is hardly continuing success and more like continuing to survive. Edit 1: Downvoters you realize the Mac (Laptop/Desktop) Division is 9.4% of Net Revenue? Source: http://files.shareholder.com/downloads/AAPL/2074014299x0x888270/02193489-739E-4765-B66F-DADA4995F45B/Q2_16_Form_10-Q_As-filed_.PDF http://files.shareholder.com/downloads/AAPL/2074014299x0x888...

arjie 10y ago
That doesn't really matter, does it? Non-Apple laptop manufacturers are trapped in the low margins that commoditization results in. Apple's margins are rumoured to be a large multiple of that of other laptop makers.
- whatok 10y ago
  Apple computers were 10.9% of FY 2015 revenue. That percentage has been steadily dropping pretty much ever since the iPhone came out and revenue has not been growing.
  - zepto 10y ago
    This repeated focus on PC business as a percentage of Apple's own business seems odd to me. Why have you selected it?
    - whatok 10y ago
      Three points: - Non-trival amount of resources go into hardware R&D and OSX development - Desktop and laptop computer market is increasingly shrinking - Revenue growth is flat It's not as simple as "well we make $x for every iOS developer, $x/2 for every OSX developer and that's going to be $x/3 in 5 years" but that's the general gist of it. Consumers are not buying computers and Apple has never been a major business player.
      - zepto 10y ago
        So those points do not answer the question, which makes your answer seem like a deflection. Furthermore Apple's revenue growth may be flat, but their competitors are in actual decline. Consumers are increasingly buying apple computers instead of any other, and this is increasingly true in enterprises as well as consumer spaces. The percentage of Apple's business that is represented by PCs will obviously decrease as they add other business lines. What does that have to do with anything?
      - nikdaheratik 10y ago
        These points really don't matter. 1. A very large portion of their OS X development is directly applicable to what goes into iOS. And it's becoming more so. The same for their hardware R&D and what ends up being usable in their mobile products. 2. The consumer desktop and laptop market has been shrinking, because consumers have switched to mobile. Which is most of Apple's income. 3. Growth may be flat, but the margins are good, which exactly what BH is looking for. Finally, and most obviously, Apple needs computers in order to make software for mobile. They own pretty much the whole stack and are able to make a hefty profit by selling their tools (hardware and software), that they would need anyways, to the rest of the world. This is classic vertical integration and it makes alot of sense business-wise.
  - megablast 10y ago
    What does this have to do with how successful Apple's computing business in the outside world?
- valarauca1 10y ago
  I say >While they've been profitable in the PC space (laptops/desktops) to call them successful is a bit of stretch. You say >Apple's margins are rumoured to be a large multiple of that of other laptop makers. So we agree they're profitable but you are simply arguing they are so more profitable their volumes don't matter. So do they? If we want to break out numbers [1] from March 2016 quarterly report. Mac (Laptops/PC's) accounts for $12.5bil Net Sales, which is 9.4% of quarterly sales totally <11 million units. The funny thing about this is their Services category (iCloud, iTunes, App Store, Apple Health Kit) has (more then) doubled in 6 months and its now ~$3bil of Net Sales of their Mac category. At current growth rate's it'll eclipse it sometimes this year. The Mac sector is quickly becoming the lowest selling division of the company. Currently only under performed by the Other category (Beats, AppleTV, AppleWatch, Cables, WatchStraps, Keyboards, Mice, etc., etc.). This is what I mean by surviving not thriving. The division is a very small corner of the company, and getting smaller. [1] http://files.shareholder.com/downloads/AAPL/2074014299x0x888270/02193489-739E-4765-B66F-DADA4995F45B/Q2_16_Form_10-Q_As-filed_.PDF http://files.shareholder.com/downloads/AAPL/2074014299x0x888...
  - nikdaheratik 10y ago
    > The Mac sector is quickly becoming the lowest selling division of the company. Currently only under performed by the Other category (Beats, AppleTV, AppleWatch, Cables, WatchStraps, Keyboards, Mice, etc., etc.). This is what I mean by surviving not thriving. I don't think that matters when you're looking at it from a value perspective, as BH does. The margins are the best out of anyone in that sector and it's making tons of cash. And, as you said, that's one of the lowest performing divisions of the company. They're basically the BMW of laptops and you're acting like that's a bad thing.
xenadu02 10y ago
You only need enough volume to compete. If that lets you command a premium and skim off the bulk of the profits, who cares about marketshare? It turns out you can enjoy network effects as well: at one point iPods accounted for over half of the global flash memory market. That was surely useful in bringing the iPhone and MacBook Air to market, no? I'd also say the PA Semi investment is paying off since Apple has owned the mobile SoC performance crown for a while now, with no competition in sight.
- ethbro 10y ago
  I agree the "sufficiently large" scale argument is probably valid, for both developer attraction and component pricing. But high margins without a monopoly is a tough course to chart indefinitely. I think if Apple is still the incredible player it is in another 30 years, it'll probably be because they've integrated cloud accounts + hardware + security to the extent user abandonment of their platform is almost unheard of. PS: Surprised no one pointed out my incorrect Apple ticker *AAPL
arrrg 10y ago
Apple has high margins and has been slowly but steadily (I think roughly during the last decade or so, maybe for longer) outgrowing the rest of the PC industry. They are very successful despite not selling the most units and not seeing explosive growth.
durandal1 10y ago
I would love to have a business that is "continuing to survive" on 25 billions in yearly sales.
snowwrestler 10y ago
The top player in the PC space, Lenovo, maintains about a 20% share. So Apple is not doing so badly at 10%. They are a top-5 computer manufacturer by share. In the most recent financial data I could find, Lenovo reported total company revenue of almost $13 billion, and Apple reported Mac-only revenue of just over $5 billion. So again: not the leader but doing a lot more than just surviving in the PC space.
- rdancer 10y ago
  Revenue is an iffy yardstick anyway. If you're the only player who is squeezing blood from that stone, it is not to the credit of the other players that they're squeezing harder. Apple still capture almost all profits in the sector, they take the meat and leave bones to the others. If there were more meat, they would be taking it, but there isn't.
zepto 10y ago
I assume you realize that market share is not a measure of success - profit is. Also, comparing the Mac business to Apple's other businesses is irrelevant - you may as well compare it with Pharmaceuticals - the relevant comparison is to other PC vendors, wherein you will find that they are highly profitable.
st3v3r 10y ago
So what? They're still making the bulk of the profit in that sector, which is what investors would care about.
tim333 10y ago
There's a Fortune article from 2013 arguing Apple made 45% of the profits in the global PC market. http://fortune.com/2013/04/16/pie-chart-of-the-day-apples-oversize-share-of-pc-profits/ http://fortune.com/2013/04/16/pie-chart-of-the-day-apples-ov... Since that has probably increased eg "Mac laptop revenues rose by 10.9 percent during the first six months of 2015, year over year, while Windows PCs fell by 9 percent, and Chromebooks contracted by 9.5 percent." Not bad really.

arjie 10y ago

That doesn't really matter, does it? Non-Apple laptop manufacturers are trapped in the low margins that commoditization results in. Apple's margins are rumoured to be a large multiple of that of other laptop makers.

whatok 10y ago
Apple computers were 10.9% of FY 2015 revenue. That percentage has been steadily dropping pretty much ever since the iPhone came out and revenue has not been growing.
- zepto 10y ago
  This repeated focus on PC business as a percentage of Apple's own business seems odd to me. Why have you selected it?
  - whatok 10y ago
    Three points: - Non-trival amount of resources go into hardware R&D and OSX development - Desktop and laptop computer market is increasingly shrinking - Revenue growth is flat It's not as simple as "well we make $x for every iOS developer, $x/2 for every OSX developer and that's going to be $x/3 in 5 years" but that's the general gist of it. Consumers are not buying computers and Apple has never been a major business player.
    - zepto 10y ago
      So those points do not answer the question, which makes your answer seem like a deflection. Furthermore Apple's revenue growth may be flat, but their competitors are in actual decline. Consumers are increasingly buying apple computers instead of any other, and this is increasingly true in enterprises as well as consumer spaces. The percentage of Apple's business that is represented by PCs will obviously decrease as they add other business lines. What does that have to do with anything?
    - nikdaheratik 10y ago
      These points really don't matter. 1. A very large portion of their OS X development is directly applicable to what goes into iOS. And it's becoming more so. The same for their hardware R&D and what ends up being usable in their mobile products. 2. The consumer desktop and laptop market has been shrinking, because consumers have switched to mobile. Which is most of Apple's income. 3. Growth may be flat, but the margins are good, which exactly what BH is looking for. Finally, and most obviously, Apple needs computers in order to make software for mobile. They own pretty much the whole stack and are able to make a hefty profit by selling their tools (hardware and software), that they would need anyways, to the rest of the world. This is classic vertical integration and it makes alot of sense business-wise.
- megablast 10y ago
  What does this have to do with how successful Apple's computing business in the outside world?
valarauca1 10y ago
I say >While they've been profitable in the PC space (laptops/desktops) to call them successful is a bit of stretch. You say >Apple's margins are rumoured to be a large multiple of that of other laptop makers. So we agree they're profitable but you are simply arguing they are so more profitable their volumes don't matter. So do they? If we want to break out numbers [1] from March 2016 quarterly report. Mac (Laptops/PC's) accounts for $12.5bil Net Sales, which is 9.4% of quarterly sales totally <11 million units. The funny thing about this is their Services category (iCloud, iTunes, App Store, Apple Health Kit) has (more then) doubled in 6 months and its now ~$3bil of Net Sales of their Mac category. At current growth rate's it'll eclipse it sometimes this year. The Mac sector is quickly becoming the lowest selling division of the company. Currently only under performed by the Other category (Beats, AppleTV, AppleWatch, Cables, WatchStraps, Keyboards, Mice, etc., etc.). This is what I mean by surviving not thriving. The division is a very small corner of the company, and getting smaller. [1] http://files.shareholder.com/downloads/AAPL/2074014299x0x888270/02193489-739E-4765-B66F-DADA4995F45B/Q2_16_Form_10-Q_As-filed_.PDF http://files.shareholder.com/downloads/AAPL/2074014299x0x888...
- nikdaheratik 10y ago
  > The Mac sector is quickly becoming the lowest selling division of the company. Currently only under performed by the Other category (Beats, AppleTV, AppleWatch, Cables, WatchStraps, Keyboards, Mice, etc., etc.). This is what I mean by surviving not thriving. I don't think that matters when you're looking at it from a value perspective, as BH does. The margins are the best out of anyone in that sector and it's making tons of cash. And, as you said, that's one of the lowest performing divisions of the company. They're basically the BMW of laptops and you're acting like that's a bad thing.

xenadu02 10y ago

You only need enough volume to compete. If that lets you command a premium and skim off the bulk of the profits, who cares about marketshare? It turns out you can enjoy network effects as well: at one point iPods accounted for over half of the global flash memory market. That was surely useful in bringing the iPhone and MacBook Air to market, no? I'd also say the PA Semi investment is paying off since Apple has owned the mobile SoC performance crown for a while now, with no competition in sight.

ethbro 10y ago
I agree the "sufficiently large" scale argument is probably valid, for both developer attraction and component pricing. But high margins without a monopoly is a tough course to chart indefinitely. I think if Apple is still the incredible player it is in another 30 years, it'll probably be because they've integrated cloud accounts + hardware + security to the extent user abandonment of their platform is almost unheard of. PS: Surprised no one pointed out my incorrect Apple ticker *AAPL

arrrg 10y ago

Apple has high margins and has been slowly but steadily (I think roughly during the last decade or so, maybe for longer) outgrowing the rest of the PC industry. They are very successful despite not selling the most units and not seeing explosive growth.

durandal1 10y ago

I would love to have a business that is "continuing to survive" on 25 billions in yearly sales.

snowwrestler 10y ago

The top player in the PC space, Lenovo, maintains about a 20% share. So Apple is not doing so badly at 10%. They are a top-5 computer manufacturer by share. In the most recent financial data I could find, Lenovo reported total company revenue of almost $13 billion, and Apple reported Mac-only revenue of just over $5 billion. So again: not the leader but doing a lot more than just surviving in the PC space.

rdancer 10y ago
Revenue is an iffy yardstick anyway. If you're the only player who is squeezing blood from that stone, it is not to the credit of the other players that they're squeezing harder. Apple still capture almost all profits in the sector, they take the meat and leave bones to the others. If there were more meat, they would be taking it, but there isn't.

zepto 10y ago

I assume you realize that market share is not a measure of success - profit is. Also, comparing the Mac business to Apple's other businesses is irrelevant - you may as well compare it with Pharmaceuticals - the relevant comparison is to other PC vendors, wherein you will find that they are highly profitable.

st3v3r 10y ago

So what? They're still making the bulk of the profit in that sector, which is what investors would care about.

tim333 10y ago

There's a Fortune article from 2013 arguing Apple made 45% of the profits in the global PC market. http://fortune.com/2013/04/16/pie-chart-of-the-day-apples-oversize-share-of-pc-profits/ http://fortune.com/2013/04/16/pie-chart-of-the-day-apples-ov... Since that has probably increased eg "Mac laptop revenues rose by 10.9 percent during the first six months of 2015, year over year, while Windows PCs fell by 9 percent, and Chromebooks contracted by 9.5 percent." Not bad really.