Macs Defy Windows' Gravity

News Analysis. Consider this: Apple's retail market share is 14 percent, and two-thirds for PCs costing $1,000 or more.

Should I repeat those numbers? The share data is for first-quarter brick-and-mortar stores, as tabulated by the NPD Group. Apple's market share is but one measure of success. Sales growth is way up, while Windows desktop PC sales are way down.

"In notebooks they're growing two times the market," said Stephen Baker, NPD's vice president of industry analysis. "Windows notebooks are pretty much flat right now."

For the first quarter, Windows notebooks had "zero percent" growth year over year, Stephen said. By comparison, Apple notebooks had "50 to 60 percent growth."

On the desktop, "They're up 45 percent," he continued. "The [overall] market is down 20 percent. Windows desktops would be down 25 percent." The figures are also for first quarter.

I spoke with Stephen earlier this afternoon. He remarked: "iMacs are growing and the Windows desktop ain't. No matter how you look at it, Apple is outperforming Windows."

A statement like that raises the question: Is Windows Vista the problem? The operating system has met with a cool reception, even with Microsoft claiming 140 million licenses have been shipped.

"I don't believe that Vista's to blame," Stephen responded. "The vast majority of consumers don't care [about the installed operating system]."

Apple's market share in what NPD calls the "premium" category, or laptop and desktop PCs selling for $1,000 or more, is nothing short of phenomenal: 66 percent. That's right, two-thirds.

With the exception of the Mac Mini, all Apple computers sell for more than $1,000. "If you don't give people a choice, people will spend more," Stephen said.

Apple's success above $1,000 defies some of the conventional retail thinking about PCs, where the emphasis is on lower pricing and greater features. "Consumers don't care about features," Stephen asserted. "People see a value proposition in an offering that gives them a great experience."

Stephen said Apple appeals to the right segments, like multiple-computer households. Consumers that are buying a second, third or even fourth PC have different buying priorities, such as ease of use.

But the retail stores make a huge difference. "Apple has got better distribution than it's had in the last 15 years," Stephen explained. "They're in the right spot right now. There's the iPod advantage. But the big thing is the stores."

Apple's retail stores aren't just places to buy Mac products. They're part of a larger end-to-end value chain—and with it the promise of a certain kind of experience.

"What Apple drives home: This is a product that we own from factory to finger," Stephen explained. "We exert some control so that you get the best experience. When you get in the store, we get you what you want."

Apple's factory-to-finger approach works for its own retail operations, but what about what Stephen called its "non-captive channels," such as Best Buy? That's where Apple has to compete with many other products. "They've already won when somebody comes into the Apple Store," Stephen said. "How does it play in places where they're not the only answer? How big a handicap is Windows?"

Stephen didn't have an answer, but it's not difficult to guess: not nearly as well in third-party retail shops as through the Apple Store.

Given Apple's end-to-end success—from product conception to production to sale to service—I asked Stephen if Microsoft should open its own company stores, even if only a few flagship ones like Nokia.

"Yes," he said emphatically. "In a multi-channel environment you should have some kind of owned--and operated--channel as well." He cited a couple examples. One of them: "When you look at Coach they have their own showcase stores as well."

Posted by Joe Wilcox on May 16, 2008 6:30 PM

Additional work to the analysis of Airmiles pie chart

From what it’s evident on the page 64, top diagram about the products that my respondents spend their airmiles on, there were 43% of the respondents, who said that they don’t use airmiles.

This could have been due to the fact, that they might not be flying enough in order to get the sufficient. However, I have worked out the mean frequency distribution for the length of flights and how often/frequently they fly, provided below. The data provided below suggests, that they have been travelling enough, in order to obtain airmiles, but the fact that they don’t use airmiles can due to several reasons:

• 43% of my respondents simply don’t use airmiles, because they don’t want to, it’s too complicated, or that they don’t want to waste time on this or maybe don’t have enough time to go through the process of registration, in order to be eligible, or do not have enough time to collect enough tickets in order to apply for airmiles, because they don’t save their boarding passes or tickets.

• Alternatively, this could also be caused due to poor information and the fact that some of my respondents didn’t know that airmiles system exists.

• The airmiles system or its interface might be too complicated for some people to understand and be less convenient to use, which might also discourage these people to use airmiles.

Mean Frequency Distribution for the type/length of my respondents' flights
	№ of hours	Mid-point	Frequency	Frequency*mid-point
a) Long-haul flights	8 to 24	16	4	64
b) Medium-haul flights	3 to 7	5	20	100
c) Short-haul flights	0 to 1	0.5	1	0.5
Total:		21.5	25	164.5
(frequency*mid-point)/frequency= 164.5/25= 6.58
6.58 hours- is an estimted length of the flight that most of my respondents use

Mean Frequency Distribution for how often my respondents fly
	№ of times	Mid-point	Frequency	Frequency*mid-point
a) 1-2 times a year	1 to 2	1.5	8	12
b) 3-5 times a year	3 to 5	4	6	24
c) Other	5 to 12	8.5	11	93.5
Total:		14	25	129.5
(frequency*mid-point)/frequency= 129.5/25= 5.18
approx.= 5 times a year is an estimated number of times when my respondents fly per year

Mean Frequency Distribution for the 'other' types of flights that my respondents choose
out of 44% of those who chose 'other'
	№ of times	Mid-point	Frequency	Frequency*mid-point
a) 6-8 times	6 to 8	7	5	35
c) 10-12 times	10 to 12	11	4	44
f) 16- 20 times	16 to 20	18	1	18
Total:		36	10	97
(frequency*mid-point)/frequency= 97/10= 9.7
approx.= 9.7 times a year is an estimated number of times when the respondents who
chose 'other' flyper year