This article is more than 1 year old

Apple's consumer strategy slips

Niche to see you - to see you, niche

Analysis Apple's plan to grow its business by attracting consumers could be breaking down.

According to data from market researcher Media Metrix, cited by Nando Times, Apple's share of computer-owning US households fell from 4.9 million homes in January 1999 to 4.6 million for the same month this year, a drop of around six per cent.

In short, during 1999 300,000 US households decided they didn't want a Mac no more.

Of course, one swallow doesn't make a spring, and one bad month doesn't make a trend. However, given that Apple's recovery strategy is predicated on building up its share of the consumer - ie. home - market, Media Metrix's statistic should be disturbing for the company.

Doubly so, given the way Apple's consumer-oriented products have been selling of late. Earlier this year, US retail market watcher PC Data found that Apple's retail sales volume - which it's reasonable to assume consists mostly of home-oriented iMacs and iBooks - was also down year on year.

Apple CFO Fred Anderson recently confessed that "iMac sales were a bit below original expectations" during the company's most recently completed fiscal quarter. Sales were down around 50,000 units for the April, May and June quarter. In total, some 450,000 iMacs were sold during the quarter. For the same period last year, 487,000 iMac were sold, a fall of just under eight per cent. However, that has to be taken alongside a 12.7 per cent increase in unit shipments year on year.

Sources in Taiwan suggest that some 300,000 iBooks were produced during the final six months of last year and 220,000 during the first half of calendar 2000, which tallies closely with official Apple numbers.

Overall, iMac sales are down both year-on-year and quarter-on-quarter, by around 22,400 and 41,660 units respectively. iBook sales are down 13,130 units quarter-on-quarter. And, year on year, 300,000 fewer households own Macs.

Aiming high

So where does this get Apple? Basically, chasing the professional market, its traditional business arena, once more. Power Mac sales, while showing a tiny dip between Q2 2000 and Q3 2000, experienced a slight increase in unit shipments year on year. PowerBooks shipments went through the roof, growing 58 per cent year on year and 14 per cent between the second and third quarters this year.

Of course, that's good news for Apple as a business, since the pro products generate higher margins and cost more, boosting both profitability and revenue. It's telling that the new Power Mac G4 Cube (codenamed 'P9', incidentally) is aimed at the mid to high-end of the Mac market, rather than the consumer space, again showing a clear focus on the revenue generators.

Again, that's good news for Apple's bottom line, but the slowdown in consumer kit shipments - in part, because both lines are in need of an update; at least the iMac got one, yesterday - and the shrinkage in home Mac ownership point to a weakening in the very market Apple has been trying to attract to build its overall market share. In short, consumer machines aren't being sold to consumers.

Of course, we'll need three months or so to see what effect the revitalised iMac line has on real consumer sales, though it's telling that Apple now has two top-end Special Edition models instead of one. Apple's own figures show that around 40 per cent of iMac buyers are new to the platform, which is good, but doesn't necessarily mean they're going into homes. The Media Metrix statistic suggests they aren't.

The ghost of Gil

This should matter to Apple, since it implies a narrowing of its user profile. The consumer strategy was all about attracting a not just a larger audience but a wider, more mainstream one, and all these statistics suggest that isn't working - or at the very least not as well as it should be.

Again, this isn't a problem for Apple's bottom line, at least not for now, but it does suggest - and Apple's latest product launches imply the company knows it - that the Mac is and always will be a niche player. No longer is the Mac CEO Steve Jobs' "computer for the rest of us", it has become the computer for those of us in the club.

The irony here is that, beyond Jobs' flirtation with the mass consumer market, the Mac, through the special edition iMacs, the Power Mac G4 and the new G4 Cube, has become a quality item for those buyers willing to pay a little more for those little extra touches. In short, Apple is the Maglite of the computer industry. And that's a plan first outlined not by Jobs but by his predecessor, the now much-maligned Gil Amelio. ®

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