Mac worldwide market share hits 3.5 percent in Q2 2008

MIke, to you ubergeeks, market share is paramount. To we in business or any smart investor, it's profitability, and almost nothing more, except for sustainability as well. MS has done good on both fronts. Unfortunately, their shares are less then when I purchase just before XP rolled out. If you've purchased MS stock in the last several years, you actually lost money [obviously if you sold]. This is obviously bad in the world of investors. I have two close friends and another person that I know are financial planners. While Gate's best buddy Warren Buffet claims it's a 'buy' or top ten or whatever, as expected, no financial planner that I know does, even though it's rated high. Feel free to put it in your portfolio, but it won't make you a nickle. Buy Apple stock and you can afford an expensive Vista PC:) [just kidding] The market runs the economy, not Windows market share. Obviously, gas prices are what they are because of market speculators, more than OPEC.

Microsoft stock is terribly undervalued and that's because Wall Street consistently misunderstands how the industry works. I mean, Microsoft's experiencing it's fastest growth in 10 years, is making exceedingly high profits and yet the share price is still low. Even Steve Jobs has admitted he never quite understood how Wall Street works. I mean, just look at how ridiculously high Google's share price has been for the last few years - and their only profitable business is search and that has recently showed signs of plateauing growth. Which all points to one thing: the tech stocks are driven by media hype. The popular media darlings: all things Apple and Google have obscene stock prices, whilst the consistently growing giant, Microsoft, with no great media hype of any real note, and whose profits and market capitalisation are much higher than its media darling competitors, has a share price that is consistently disappointing. Dumb.

I think the clever thing behind Apple's strategy, DRWAM, is the fact that it continues to focus on consumer electronics where the profit potential is much higher than the commoditised computer hardware market. Despite the more than 100 million iPods sold, there are no signs of the juggernaught slowing down even though they are pretty expensive devices. The iPhone is the same. And as you said, innovation potential is and must be greater in order for their to be a demand for such expensive products. Kudos to Apple. In my view, Apple views any growth in its computer business as more of a bonus than anything else - there's much more fat to be had in gadget land.

Rod, I agree on all. Especially about the Wall Street comment. How in the heck can MS stock be so flat? It just baffles me. There are so many MS products that not even you ubergeeks know them all. Lost headlines should read MS improves Medical care and Saves Lives- MS is helping to develop apps to decrease fatal medical errors, but up to 50%. Other software will improve patient access to their own medical records and secure them as well...see article below... If Wall Street is on top of every fart that Steve J makes, where is the justice for MS stock? I"m sorry for the rant. It certainly is not anti-Apple. but I have a passion for improving patient care and medical quality. Considering Wall Streets lack of response on this obvious Medical reform just bewilders me. I mean, the presidential race seems to have this at or near the top of the debate list.

Doc/Robert, MS's stock has been a dog, and I'd agree with Robert that the market hasn't been entirely fair. They're been growing pretty steadily while their stock has been in the dump. The market is obviously not a purely rational mechanism. Still, their growth is nothing compared to Apple and that hasn't come "easy". Also, it should be noted that while the iPod and iPhone are major growth drivers, the Mac is actually making up MORE of Apple's growth than either product right now. Apple is not treating the Mac as a second-class citizen in it's strategy. It's front and center and it's growth and profit are exceeding the iPod now 4 to 1. Excuse me if I don't interpret "Apple is focused on gadgets" as winzealot code for "the Mac is an afterthought". Generally, I think that's the intent behind those statements. Not saying it's yours, Robert, but in general it is. I think the key to Apple vs. Microsoft is simple. Apple at it's core is a consumer company and Microsoft at it's core is a business company. Jobs has always looked to Sony at it's best for inspiration. Innovation is the core of any consumer products company and Apple views the Mac and its mobile devices through that prism. Differentiation through innovation and a total solution. The hacks like Rob Enderle that think Apple is all about marketing have absolutely no idea what they're talking about. Apple's products are their brand. Their marketing is a direct, simple extension of the product message. Their engineering is driven by a consumer-focused vision and unified concept for what it means to be a Apple product. As Jobs said, "design isn't how something looks, it's how it works". Brand isn't how a product is marketed, it's the entire chain and how consumers view their experience. Microsoft is built differently. They've never been a direct consumer company and have thus never really had innovation as the core objective or need. Their first major client was IBM, not the user. Now, their customers are OEMs and Enterprises. They deliver a broad, stable platform to a change-averse market and try their best to move the OEMs forward to deliver enough new value for consumers to upgrade each cycle. This isn't a slam against MS, and I'm not saying they never innovate (Media Center and Tablet are major innovations, if a market failures). Microsoft appears to make great business solutions and works well with it's business partners. What I'm saying is they're are driven by platform and strategy first and foremost and their main customers don't want the kind of radical changes and surprises that are core to Apple's target market. Why does this matter? Why am I ranting here about this? Because it cuts to the core of this marketshare discussion and what meaning we should derive from the numbers we have. Apple is targeting the consumer and doing incredible in that space. Microsoft, obviously, reaches the consumer, but is directly targeting business and is doing incredible in that space. These two can co-exist. Why do we see Apple embracing Exchange? Because it's good and it's what business uses. Why does Microsoft continue to develop Office for the Mac and sell it direct to consumers? Because the market for consumer Mac software is very large and very profitable. Apple may have 20% or more of the US consumer market and as much as 10% of the worldwide consumer. That is a big deal as a platform. That is more important than their 3.5% share of all computers used for every purpose imaginable. I've said this a thousand times. Paul harps on this 3.5% at every turn. It's his go-to number. That is dishonest bashing and pandering to the platform zealots. It's code for "the mac is irrelevant". Paul certainly devotes WAY more than 3.5% of his time to Apple and the mac. Just because Mac zealots over blow the power of the Mac in the market doesn't mean it helps to pile on with equally dishonest rhetoric. @RaaJ, You don't get it. You numbers don't scale in the market or take account for the realities of demand and what drives it in the market. You've failed to demonstrate why a company that "sells 3 computers" can "easily" double it's sales. I'm not sure what's so "touchy feely" about actually deeper thinking. You're just lazy and more interested in bashing the opposition than being accurate or honest.

"And besides Apple is small in the computer side of things but they are obviously not a small unknown company that would have trouble advertising. " Actually, in most parts of the world, they are unknown and they obviously do have hard time advertising since, as a non-American, I've yet to see an Apple advert anywhere, on any medium. Apple is not a global tech brand. They could be, but choose not to be. I don't know why. Maybe it has to do with that coolness factor or something -- keeping it small and privileged. Someone above said you can always take your Mac to some genius bar or what not. That may be true for one country in the world. Elsewhere, such services along with decent warranty only exist for the PC buyers. Go figure which one people are going to choose: An expensive computer with mere one-year warranty (to be sent for a couple of weeks somewhere abroad for servicing) from a never-heard-of brand that only sells online. Or a well-known manufacturer with the familiar OS, on-site, long warranties, etc. and the products on display in a store. This of course applies to the iPhone too, which now has some 4-5% of the smartphone market, though unlike current Mac efforts, it actually has future potential despite its ludicrous pricing, if only Apple understands to market it correctly -- i.e. as something "different", or even, heck, "cool", as it cannot compete on the traditional metrics such as features or technology or price alone.

@johnpapola Based on " don't disagree with him that the numbers are often used to hype the impact of the mac beyond what is rational. No question. But his focus solely on outright worldwide share is the opposite extreme." how would you have a rational debate? Since Apple only releases "outright worldwide" sales figures. There's really no other criteria that can be debated rationally. All the "But Apple ownz the x market" and "Europe doesn't count" and "Let's only count students in the US" are just hype. As are, "share doesn't matter' (except when we discuss iPod) or "Hey, their stock price is up so you're wrong". So, seriously, what do YOU consider a fair, rational debate given the limited actual data?

@ JP: You are the one that doesn't get it. It is generally very difficult for a small company that sells 3 computers a quarter to suddenly sell 6 in a quarter. That is unless, the said company is riding the wave of popularity rubbed off by an increasingly dominant product in another field. But we are not talking about a mom and pop shop here, but we are talking of Apple who enjoys a near monopolistic grip over the digital music player business. These kinds of spurts happen, albeit rarely.. and the small company HAS to play up the fact that their sales have doubled, if they want to leverage the momentum to build up hype. Hype multiplies exponentially, but sales rarely does. Let's get one thing clear. I really like Apple's products. What I don't like is their ethics and marketing practices. I don't romanticize the notion that they are flawless, and can't stand the idiots who do.

@Mike "it may end up decreasing share due to the Mac users who decide to replace their obsolete Macs with new Windows Vista systems." There is nothing wrong with dreaming.

There was some stat, again from Steve J, that a large number of new Mac buyers were switchers, but I can't remember what I read that he said. I think it was more than 20% of new buyers. Still that's not a lrage amount of the Windows user base and in fact is rather small.

The hackintosh scene is at critical mass IMO. Recent scene releases(Kalyway and iATKOS) make it beyond easy for anyone to install dual boot OSX hackintosh system. EFI bypass is broken so you get to use the vanilla mach kernel that doesn't brick your installation after a software update. Besides patched updates are issued within days of official release.

@jp - "Convincing a life-long Windows user to switch to the mac which is a different interface with all new software is NOT EASY, which is what these growth numbers require. It's not like there's this massive market of first-time PC buyers in the US, Europe and Japan. " I am not being snide...but I have to wonder if you have considered all of the kids leaving home for college or leaving college upon graduation and moving on to a career...I would put these people into the first time PC buyer group...I wonder how many come from homes that already use Macs and schools that use Macs...thus they go out and buy a Mac. I know of quite a few kids that fit into that category...my daughter just graduated high school and is getting ready for college. Her and most of her friends want Macs to take to college. Many of them come from Mac homes and I know for a fact that 80% of the computers at the high school were Macs. Where do we lump those people? Certainly, they are first time PC buyers and not life-long Windows users. I think that what this says is that not all...in fact I would wager that not even most...Mac purchasers are switchers. Remember, Apple has an incredibly loyal customer base...many homes have multiple Macs and many send their kids into the world with a Mac under their arm. --tayme

@Mike, Let's do a little thinking experiment. It's going to require honesty. What information do you draw from Apple's worldwide market share? What would you expect most people to derive from it? How does that information impact a developer? How about a consumer? Is this single statistic enough information for any of these groups of people to act on? If it's not, then wouldn't that mean this number lacks enough inherent meaning to be used as the sole basis for any discussion? Now, Gene Munster has estimated Apple's US consumer share at 21% and worldwide consumer share at 10%. Maybe that's wrong, but it does more closely correlate to other data, such mac retail market share as well estimates of mac software's share of the overall software market. Let's, just for the sake of argument, that he's close. Let's say US is 15% and worldwide is 7%. How does this change those questions? Then there's the absolutist approach is 30 to 40 million users whose demographic data include being more affluent, more tech-savvy and dramatically more likely to pay for software and media makes for a pretty compelling market. Now, let's look at some of the biggest software firms that serve consumers and small business: Adobe and Intuit. Adobe has just ported nearly all of their windows-only applications to the Mac as part of CS3. Not cheap undertaking and surprising considering Premiere is entering with Final Cut as an entrenched competitor made by Apple themselves. Still, they did it. Even Avid has ported their biggest windows-only products (symphony and express) to the mac. Intuit supports the Mac for both Quicken and Quickbooks and has recently announced a ground-up re-write of Quicken in Cocoa. Again, no cheap undertaking. But they're doing it. Clearly, neither firm looked at worldwide market share. And if they did, it was overridden by the factors I'm talking about: segment share, userbase size and demographics. I'm going to assume that your "concern" over the OS/2 death scenario vis-a-vis Windows-on-Macs is a genuine warning and not a prediction in order to "prove" that the Mac has no future. The latter is zealot hack fodder, the former is reasonable concern. There is certainly a danger of Windows-on-Mac and virtualization leading to some developers ignoring native OSX development in favor of saving costs. So far, though, the reality on the Mac is the opposite as demonstrated above and in the general news on the ground from WWDC. The developer community for the Mac is healthy and growing and attracting more and more software than ever before. Which is my core point regarding the meaninglessness of this worldwide share discussion. So... do you want to engage in this discussion, or are you just going to dismiss this as "hype". it's up to you, Mike (and anyone else, including paul).

@johnpapola, What I would answer is that with only one number to draw from (and the rest being pundit estimates) we can only discuss that number. Anything else is just going to end up with "my expert is better than your expert" As to the OS/2 comparison, it was precisely a concern. I actually wonder what Apple is thinking in effectively telling developers to not target their platform. With a small market share, it's a hard enough business decision to invest for a platform with a wildly different API and tools and pushing Windows compatibility is, frankly, either a bad decision or acknowledgement that they've given up on all but niche markets. (I did a more detailed post about it on my personal blog last June after Apple's WWDC 2007 when Apple essentially told their developers to, in Scoble's words, "Go pound sand". The post is at http://mikegalos.spaces.live.com/blog/cns!D67AAFB9181617CF!690.entry if you're interested.)

First, thanks for replying and engaging in the discussion honestly. I have to say, though, that your perspective on Apple, it's developers and community are really out of step with reality and that link is fill with bashing and snarky lines like: "less people use Macintosh than believe the moon landing was faked on a sound stage". That's just a lame insult and your "coverage" overall is just a classic apple-bashing "death knell". It's also totally obsolete. Apple has since that 2007 WWDC released the SDK for the iPhone which has blown developers away far and wide and now has the most compelling mobile development platform on earth. "I actually wonder what Apple is thinking in effectively telling developers to not target their platform." Where did you get that idea? Also, did you actually go to WWDC? "With a small market share, it's a hard enough business decision to invest for a platform with a wildly different API and tools and pushing Windows compatibility is, frankly, either a bad decision or acknowledgement that they've given up on all but niche markets." I brought up many more points than strictly the pundit estimates. How do you account for Adobe's investment in porting more apps to OSX? Or Intuit moving Quicken to Cocoa? Or the growth of mac software and developer support? You're painting a picture of something that isn't reality, which is a picture of developer retreat and platform stagnation akin to OS/2. You also seem to be rooting for it to happen in that Apple-bashing "see, we told you the mac was dead" kind of way. It's clearly not a "bad decision" to target the mac for many developers large and small and I find your analysis here to be built on ignorance and bias. I'm being honest and direct here. Not trying to attack you. In 2005, the Software Publisher's Association estimated that 16 percent of computer users are on Macs and the Software and Information Industry Association estimated that 18% of ALL SOFTWARE SOLD was Macintosh software. That is yet another indication of the meaninglessness of Worldwide share, which you are harping on with Paul. Truth be told, I don't think you are interested in understanding the Mac market. I think you have an axe to grind for some reason and have some interest in seeing Apple and the mac fail. Maybe it's just to prove that you're choice was the right one. I don't know. I don't get it. But I find the glee and snark in your blog post and your posts here impossible to justify.

Oh, and, for your numbers to work out, let's look at this: Apple in 2005 was about 3% of the market but had 16% of all sofware sales? And you believe that? BTW: according to a poll done by the Gallup organization, 6% believe the moon landing was faked. I was being nice by not saying "almost twice as many people believe the moon landing was faked as use Macintosh". Apple would kill for as high a percentage of the market as people who think the moon landing was faked. But, hey, that's actual data. Can't allow that to interfere with thinking that a tiny niche product should be taken seriously. But, let's put it graphically... WWWWWWWWMWWWWWWWWWWWWWWWWWWWWWWWWWWWWMWWWWWWWWWWWWWWWWWWW The "M"s are Mac users, the "W"s are Windows users. RRRRRRRRRRRRFRRRRRRRRRRRRRFRRRRRRRRRRRRRRRRRRRFRRR The "F" are people who think the moon landing was fake, the "R" are people who think it was real. But, maybe you're right and share doesn't matter...

Your moon landing jab may being technically true. There are many statistics that you could have used to demonstrate the relative scale of the Mac userbase. But the connotation is not something you can deny and was absolutely intentional insult. You're saying "look, there are more crazy idiots that believe the moon landing was faked than there are crazy idiots that use macs". You're a smart guy. You clearly don't like the mac or it's users and are unwilling to acknowledge any data that goes against you core believe that the mac is so tiny that it's doomed. Yet you are willing to trot out insulting gallup polls (which are likely no more reliable than anything I'm bringing to the table here). You've given me not a single reason to believe you're interested in real discussion. The entirety of your answer thus far can be summarized like this: "There is only worldwide marketshare. Any information of any kind that contradicts that number will be ignored" And yet, worldwide share is based on estimates by two organizations averaged together that are anything but "fact". You choose to believe IDC and Gartner on worldwide, yet not believe them on US or believe other organizations like the SPA and SIIA. You only seem interested in the facts that back up your thesis.

@tayme Actually, I have a lot of respect for the Macintosh. I wish Apple had actually succeeded in one of their attempts to write a modern OS rather than bolting their UI onto Unix because it would have moved the industry forward, but that's my biggest objection. What I do object to is the insanely disporportionate amount of attention that a 3.5% share niche product gets and the pass they get every time they screw over their customer base or lie about their competitors. What I also object to is the provincial echo chamber of The Valley. For example, if you go the the computer museum in Mountain View you'd think that the history of computers was: First there were mainframes, then minis (but they were really just small mainframes so let's skip that), then the SUN Workstation appeared (well, OK, and Apollo workstations) and computing was freed and brought to the world - well, and there was the whole PC thing single handedly invented by Apple, too, but really it was Unix workstations.

Let's add a little history here to reflect stagnation (and, yes, I know the names were sometimes System x or Mac OS x or Macintosh system software version x but let's skip the totally pedantic): Mac OS 1 - 1984 Mac OS 2 - 1985 - 1 year later Mac OS 3 - 1986 - 1 year later Mac OS 4 - 1987 - 1 year later Mac OS 5 - 1988 - 1 year later (really v4 with Multifinder) Mac OS 6 - 1988 - a few months later Mac OS 7 - 1991 - 3 years later Mac OS 8 - 1997 - 6 years later (really just a name change for 7.7 to break clone contracts) Mac OS 9 - 1999 - 2 years later (final version of System 7 in reality) Mac OS X - 1999 - Same year Mac OX 11 - ? - 9 years later and still no new OS In reality, the big versions were 1, 6, 7 and 10 so those gaps are 4 years, 3 years and 8 years. We've now had v10 for 9 years and with the announcement that 10.6 will be a major feature free tuning release, we're looking at a minimum of 2010 for an actual new OS at the earliest. That's an 11 year lifespan for an OS. That's worse than System 7. (sigh)

Or, to simplify... It took Apple 8 interminable years to replace System 7 and that included the fiascos of Gershwin, Copland, Taligent and Rhapsody. In the even longer 9 years of OS X so far we're reduced to people acting as though making the tray 3-d, the menu bar translucent and adding a back-up utility with a space themed background screen are earth-shattering breakthroughs. That's what's pathetic.

@john Or, to put it another way, the BIG DOMINENT MAINSTREAM product (Windows, in this case) is inherently not the place for innovation. Backward compatibility and stability of the industry are the keys that role requires. Innovation should be coming from the smaller players and their innovation should drive the industry forward including pushing the dominent player. There are two niche players in the OS market, Apple and Linux. Apple doesn't innovate and won't because nobody complains about their lack of innovation. Their fans are too tied to Apple as a fashion brand and a source of their identity. Linux doesn't innovate. Period. Their model doesn't allow for it. That leave Microsoft to be the innovator and the fact that they've stepped up at all in that role is amazing. They could have stopped OS development at XP and Server 2003 and still kept their market share and increased profits by not having the hundreds of millions of dollars of expenses. They didn't and the industry is better for it.

@tayme First off, Windows XP (and Vista) are based on a totally different OS than Windows 95 so they're innovative in literally hundreds of ways that have never been present in a consumer OS. As for the 'well, the OS has reached stability", I'd say that's just an excuse given by people who have gotten used to the stagnation and don't know enough of the technology to know that there is much, much more that could be done. The multi-personality OS is decidedly not running a shell on top of an OS like Windows 3.0 did. It's what Windows NT did when it came out. Windows NT's actual underlying OS doesn't use Win32 or Win64 or any variant. The actual API exposed to developers is done with a personality module that rides above the base OS. Windows NT 3.1, for example, could run Windows, OS/2 or POSIX applications natively with each getting the OS that they wanted, not in emulation or as a guest OS but running together in same session. It's hardly new but it would be a big step forward to, at least, 1990s state of the art.

Yikes...my typing was horrible in that last post. Hopefully it is not totally unreadable. --tayme

@Mike, "It took Apple 8 interminable years to replace System 7 and that included the fiascos of Gershwin, Copland, Taligent and Rhapsody." That was essentially a different company that was making those mistakes. The apple today is the NeXT of yesterday. Jobs had left and formed NeXT which succeeded in shipping a modern, object-oriented OS. Meanwhile, I can make the same statement about Microsoft and their Cairo initiative as well as WinFS and the other promised features of Vista that were dropped. Big software projects are hard. Jobs appears to have a great track record with them, though. "In the even longer 9 years of OS X so far we're reduced to people acting as though making the tray 3-d, the menu bar translucent and adding a back-up utility with a space themed background screen are earth-shattering breakthroughs." That is a dishonest statement. It's frankly an outrageous slam and a lie that makes it very hard to take you seriously, Mike. I invite anyone that REALLY cares about the truth to go to arstechnica.com and read all of John Siracusa's OSX reviews. Every release has massive work in it on all fronts from UI to APIs to core OS services. "I say they're stagnant and offer little to nothing to the industry." I'm really trying to be reasonable here, but statements like these are so below honest debate. NOTHING? SERIOUSLY? Apple revolutionized music distribution. They've delivered mountains of real innovation in OSX. They've developed the best mobile development platform with the most elegant and easy-to-use distribution system for software ever. There is a massive list of things they've offered "the industry". I guess the fact that every celphone maker is now trying to create "iPhone Killers" as music player makers have been trying to create "iPod Killers" is because Apple is stagnant and offers "nothing" to the industry. What a load of $hit. Honesty. "Apple doesn't innovate and won't because nobody complains about their lack of innovation. Their fans are too tied to Apple as a fashion brand and a source of their identity." Jesus. You know what, on second thought, you're really not worth an honest discussion. You are a blind apple-bashing zealot that is completely out of touch with reality. You're intellectual dishonesty is frankly disgusting. Your amazing hyperbole is beyond all reason and accountability. You are a partisan hack of the worst kind and I have no reason to waste any more of my time trying to have a discussion with you. You are Waethorn. Enjoy your delusions, pal. I hope the energy you put into keeping your blinders on brings you some kind of peace.

Lastly, to all the partisan zealots and Apple-bashers let me just go on the record as saying that I believe Microsoft has, in fact, earned their success. Gates saw the opportunity for a unified software platform and made it happen. That is historic vision worthy of epic praise. I happen to share this opinion with one mr. Steven P. Jobs who said the same thing in the early 90's documentary "triumph of the nerds" in which he laid the blame for the Mac's mainstream failure squarely on Apple and their decision to go for high margins instead of market share. You see, that's how honesty works. You acknowledge the facts, give credit where credit is due and avoid insane hyperbole and black-and-white proclamations.