The 'Book Beat

Who Cares About Apple's Market Share?

- 2006.08.24

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What is Apple's current share of the computer market? Most people will probably quote you an answer somewhere around the 5% mark.

And the iPod? That's got about 70% market share, right?

Well, no. Actually both of these figures are overestimates.

That's right - during the last quarter, Apple's most successful quarter in its entire history, Mac market share was around 2.4%, and iPod market share was a mere 14% (see Demise of a Darling: iPod Market Share Crashes to 14% Amid Management Denials).

Yes, you read that correctly - iPod market share was at 14%.

The iPod Figures

Of course, I've fiddled the iPod figures somewhat. It depends on what we are included in the iPod market.

If we stick with hard drive music players, then Apple has a phenomenal market share. If we talk about flash-based music players (such as the nano and shuffle), again we see Apple as the dominant brand.

But if we include mobile phones with the ability to play music, then Apple's market share plunges dramatically.

The Mac Figures

With such great year-on-year growth, how can the Mac still have such a small market share?

Well, one factor which must be remembered is that during the slowdown which followed 9/11, computer sales fell dramatically for pretty much everyone.

In the quarter to July 2006, Apple shipped 1.33 million computers, up from 1.11 million in the previous quarter. But by Apple's very own figures, this is still less than the number of computers they shipped in the quarter to January 2000 (1.38 million). Mac sales have been growing in recent years, but they're still playing catch-up with the company's past.

Paul Thurrott is a keen watcher of Mac market share (see Apple Announces Quarterly Results), and I've quoted him in a previous column giving a figure for Mac market share of 2.25%. He's also quoted a figure of 2.0% for 2004, and 1.9% for 2003.

His figures show that Mac market share is growing, but not at the phenomenal rate that the growth in Mac sales would have some believe.

Growth in Context

The issue is the context in which Mac growth is viewed. Yes, Mac sales are growing - but so are PC sales.

If the PC market grows faster than the Mac market, then although there may be a growing number of Mac users, the overall market share wanes. At present, it appears that Mac sales are growing faster than the PC market, but the difference isn't enough to produce a sudden surge in market share.

It's the same issue with the iPod - sales of the infamous music player have been phenomenal, but it remains a small player next to the immensity of the mobile phone market. Many see iPods as luxury items, whereas the mobile phone has become a necessity.

Active Users

But how important is market share? Does it tell us anything useful?

It gives us a measure of how a company like Apple is competing against its peers, but how useful is that information?

Much as I (and many others) loathe the analogy, in the car world the BMW or Mercedes or Porsche market share figures don't really mean much. So what if they sell a small number of vehicles compared to the rest of the industry? The companies are profitable and will therefore survive.

Likewise with the Mac; we see that the market share figure is small, but overall the company is raking the money in right now and is therefore in rude health.

But there's one more issue with market share doesn't address, and that's the number of active users.

Let's say Company A and Company B are selling computers, and each has a market share each of 50%. But if all of Company A's sales are upgrades for existing customers, they aren't growing their base of active users. If Company B is selling the same number of computers but to brand new customers, then they are seeing 100% growth.

50% market share means very different things to each company.

The problem is, there's no easy way to find the number of active users out there.

Passing It On

I recently upgraded from an iBook G4 to a Power Mac G5. This made me a new computer purchaser and a contributor to those Mac market share figures. But I didn't represent new growth - I wasn't a new customer, since I was just upgrading.

However, I did then pass my old iBook on, and thereby created a new Mac user.

Rumours, Rumours, Rumours

We all know the anecdotes: Mac users keep their machines for longer. Mac users are more likely to pass old machines onto other users to "convert" them.

But how can any of this ever be quantified? My own website has a tracker that tells me the operating system of visitors to my site. At present, it reports that 17% of my visitors use a Mac. [Editor's note: At Low End Mac, 44% of visitors use Macs.]

But do I really believe this to be the global Mac share? No!

Yet this is the kind of data that is used by major companies to estimate installed user base. Browser toolbars can report back on the OS of the browser that they are running in (for example, Alexa's toolbar sends back data that is used to rank popularity of websites).

But when such a toolbar only works with Internet Explorer and has no support for Safari users (let alone Firefox), how can we expect Mac users to be properly represented? And how would one ensure that the toolbar is installed in a suitable cross section of browsers?

Ignore the Hype

We'll never stop people talking about market share. And we'll never get a definitive number of Mac users. Even if we could identify the OS on every computer connected to the Net, where would that leave all the low-end machines that aren't on the Net but are fulfilling someone's requirements somewhere?

Market share can be misleading when thought of in terms of active users or compared to Period X in history.

What is clear is that Apple is making money. And for as long as it continues to do so, they'll continue churning out Macs.  LEM

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