Mac Share Goes Down – Again

Mikako Kitagawa, Gartner principal analyst, explained in a statement:

Low-priced mobile PCs led market growth in the US. Mini-notebooks did well in the challenging economic environment where consumers’ number one priority was to save money. Mini-notebooks continued to put pressure on low priced mobile PCs. This pressure was mainly felt in the consumer market, but it expanded into select professional markets as well, including the education segment.

US mobile PC prices likely will decline as much as 20 percent year-over-year in first quarter 2009. Overall, end-user spending on PCs is likely to have contracted in the upper teens in first quarter 2009 compared to a year ago.

Netbooks put Apple in a bind

The netbook surge greatly limits Apple’s options. The company could slash prices to compete with lower Windows PC prices, but that would sap margins without guarantees of market share regains. Apple has no netbook to sell, so it’s cut out of the margin-sapping market segment.

Mikako’s 20 percent prediction is explosive. Typically, laptop prices have been much higher than desktops. During 2008, US retail desktop prices pretty much bottomed out near $650 (£435). In February, desktop prices were just $13 (£9) more than laptops. If the trend Mikako predicts occurs, laptop prices, at least in the United States, will fall below desktops. The sucking sounds you now hear are the margins being pulled from the U.S. PC market.

If I were running Apple, I would resist the temptation to cut prices. As I explained a few paragraphs ago, Apple is performing pretty well compared with Apple a year ago. The company is better off losing marketshare to protect fundamentals.

Market share declines will have people like me wagging accusing fingers that Apple will go down. So what? It’s better for Apple to sell fewer Macs for much more than a few more Macs for much less.

This article appeared on Joe Wilcox’ Apple Watch blog at eWEEK.com