Can Apple Cut a Swathe Through the Home PC Market?
Can Apple make significant inroads into the PC market? Last week we decided it was possible provided you accepted that notion as being significant relative to Apple’s current market-share. However, within the whole PC market exists smaller market segments. The three major ones are business, home and education. The business market could be further segmented and you will find Apple doing very nicely in the multimedia segment.
However, let’s look at the home PC market. Can Apple make significant gains, not only relative to its current market-share but also as a portion of Windows PC home market-share?
Looking again at last week’s graph, we see that it has been done before.
That massive spike in 1983 was the Commodore 64 making huge inroads into, or possibly even creating the home PC market.
Could any computer do a “C64” and leap to 40% market-share overnight? Quite unlikely. In 1983 the market was fragmented among dozens of vendors, each with its own OS. The IBM-PC and clones were still only selling in the business market. Another factor was the market was tiny, so for example, Commodore sold 2 million C64’s in 1993 and achieved 40% market-share, whereas in 1993, Apple sold 4.5 million Macs, but that only equated to 12% of market-share. And nowadays its only about 4% of market-share.
Commodore’s success in 1983 is similar to the iPod’s success. The right device entered a small and fledgling market with many players but none significantly dominant. However, unlike Commodore with the 64, Apple has been able to successfully leverage the early success for ongoing success.
Commodore’s C64 sales would have been almost exclusively in the home market. Could Apple release a Mac that could chomp away such a large segment of the home market? On the one hand no, given people’s attachment to Windows, they’re not going to get out of their comfort zone.
But on the other hand, if something pushed them, then maybe. And what’s more, getting out of the comfort zone is not such a big issue because people’s real attachment to Windows hinges on two things: Windows and MS Office; familiarity and compatibility. Both of these are things Apple can overcome, and are tackling. Eg Bootcamp and the “Get a Mac” ads mentioning Office for Mac regularly.
Apple can make serious inroads into the home computer market with the right device and the right marketing. In personal computing, with the convergence of computing and home entertainment, the home market is at a point of upheaval. Recently on ZDNet there was a report that “70% of Americans are unaware of what Media Center PCs can do” despite many of them owning PCs with media center capabilities.
Can Apple convince consumers that the media center is a fledgling device and all vendors are on equal footing? And/or can Apple convince consumers that the ability to run MS Office and Windows on Macs puts it on equal footing with any Windows PC? If Apple can do either or both of these, it will take a huge chunk of the home computer market.
There is another segment Apple could use to make inroads into the home market. Games. (If you’ve all finished laughing, I’ll continue.) Recently there has been talk of Apple getting into games development, and Business Week ran a story on the possibility, with an interview with Glenda Adams of Aspyr Media. She believes Apple should get serious about games.
Games are an interesting beast. It seems in the games market, every year there’s a “killer app” released. Titles like Quake, Halo, The Sims, and Civilization easily spring to mind.
Could Apple develop a game that is a “killer app”? Given Apple could limit it to OS X only, yet still sell a computer that runs Windows, it’d have some decent leverage. But would gamers buy a computer they couldn’t upgrade? Gamers tend to like tricking up their machines with triple overhead foxtails and so forth. No current Mac for the home market allows that. You have to get a PowerMac (Mac Pro?) and the entry cost is quite high.
If Apple takes Nintendo’s approach though - i.e. that gameplay, not graphics, is king - then they really could produce a game that gamers would want and that would run on an iMac or even a Mac mini. Civilization and The Sims are two example of must-have games that didn’t rely on eyeball busting graphics.
As Business Week says:
...why doesn’t Apple try its hand at building good games for the Mac on its own? Apple is full of creative people turning out great software, but why hasn’t it ever turned out a game? After all, gaming is in Apple’s very DNA. Early in their pre-Apple careers, Steve Jobs and Steve Wozniak (some accounts suggest that Woz did most of the work) created Breakout for Atari
Between this week’s and last week’s articles, we now are at a point where we’ve identified a few ways Apple could crank its market-share up, such as by:
- Having a superior and stable OS when Vista comes out
- Producing a true Media Center computer, that like the iPod, defines the device and the market
- Developing a must-have game
- Allowing Windows to run on Macs (which of course they’ve already done)
The home market is open again and for the first time in several years. If Apple plays its cards right, it can take a sizable chunk of the market. Although I didn’t intend this to become a series, I will discuss in the next couple of weeks one of the factors I see preventing success and why switching to Mac is a real option.
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Comments
Similarly equipped and sized cars costing much less cannot compete with the cachet associated with the BMW. It has become an aspirational brand - people dream of the day that they can afford a BMW.
And yet Ford outsells BMW by a 6 to 1 margin. If price is not the deciding factor, then what is?
BB, you always seem to miss the point…
Presumably your 6 to 1 ratio is the US market only. BMW dont make trucks so i guess that would account for a lot. What does Ford make in the USA that competes with a 3 series BMW? And how many of them do they sell compared to BMW?
In Australia Ford sell the european Focus in this segment. It is a good car, and at A$30,990, the top of the range Ghia version is half the price of the cheapest 3-series at A$60,990. The Focus offers the same room, is faster, and more economical. Yet the BMW 3 series outsells it 10 to 1.
In the UK, the Peugeot 406 was the largest selling “repmobile”, but its replacement the 407 is expected to sell in only half the numbers. Why? Because company car drivers are “aspirational” and they prefer the 3 series BMW, which is considerably more expensive, smaller and less powerful.
Many factors influence the buying decisions of individuals. Corporations may choose on price, and people on a fixed income or with little disposable cash may do the same. But for most of us, and virtually everyone reading this post, our decisions reflect how we see ourselves, or how we want others to see us. We all have Apple macs.
Whilever Apple offer a product with cachet, they will be able to command a premium price. And whilever they command a premium price, they will have cachet.
In Australia Ford sell the european Focus in this segment. -sydneystephen
I’m literally baffled that you would suggest BMW sells more than Ford overall. You’re comparing how Ford fares in the luxury car segment, and trying to pass that off as disproving the claim that higher price generally = less sales. More than a little misleading.
But for most of us, and virtually everyone reading this post, our decisions reflect how we see ourselves, or how we want others to see us. We all have Apple macs. -sydneystephen
Again, “most of us”? Are you referring to 4% of the computer market? Because nobody else cares enough about brand to pay the mac premium - they buy whatever they can find in BestBuy. Honestly, this point is not even worth debating, as you are flying in the face of both common sense and the science of economics.
What does Ford make in the USA that competes with a 3 series BMW?
No, YOU are missing the point. We’re talking about Apple’s OVERALL share of the PC market and how price, and virtually price alone, relegates it to the premium market. The same is true of BMW (although BMW owners don’t seem to find this at all mysterious the way Mac users do).
In the OVERALL car market, Ford outsells BMW (globally) 6 to 1. Why would this be, even though as you point out the BMW is better designed and engineered? Price.
But for most of us, and virtually everyone reading this post, our decisions reflect how we see ourselves, or how we want others to see us.
You’re talking about 4% of the market - at most. That’s not “most of us.”
And I say “at most,” because not all Mac users think like you do (thank Christ). I for one buy Macs because they run FCP, not because I have money to throw away so I can impress people with my computer.
BB, you can talk about the overall market if you like. But then you should not have responded to my post. Go and re-read my post. You obviously missed the point that I was making. Which is a shame, because I think it is a valid and interesting point. If Apple choose to focus on the home market, and succeed in growing their market share, they do not deserve to be lambasted because their share of corporate users does not rise.
In any first year marketing course you will learn that market success is not always drive by price. In fact, many of the world’s leading brands are deliberately positioned to be more expensive than the competition.
You also missed the point that much of Ford’s market share advantage can be attributed to their presence in market’s that BMW is not - namely trucks. You did not answer the point that Focus is outsold by BMW 3 series.
If you were a little better informed about the state of the US car market you would know that despite huge subsidies from the 3 major US manufacturers, they have been unable to stem the decline in their market share and are busy closing factories, laying off staff, and doing deals with the auto unions.
You also failed to explain why, in Europe and elsewhere, where Ford still retains a price advantage, they are outsold by BMW.
You also missed the next point “most of us” - the “us” being the community who will read this post.
And Oskar - no I am not being misleading at all. Merely pointing out that success in any given market is not wholly dependent on price. It is called market elasticity - it is a long time since i studied marketing, but it is a measure of how price sensitive a product is. In my example, BMW positioned their 3 series at the premium end of the relevant market sector and, in many markets, now outsell their cheaper conpetitors. Overall Ford do better - bigger company, much larger product range. But they sell more trucks than BMW not because they are cheaper, but because BMW don’t make trucks.
It is all there in my first post. If you still don’t get it, then bad luck.