• So How Many Mac minis Did Apple Sell Last Quarter? Don’t Ask!

    April 16th, 2005

    Well, I suppose you could ask, but Apple simply dumped them into the overall eMac and iMac sales, so all you can do is make a guess. Whether it’s a good guess or not is something we will probably never know. Why should this be? Well, in releasing its quarterly financials Wednesday afternoon, which you can check for yourself from apple.com, all we know for sure is that 467,000 consumer desktops were sold, and that’s an increase of two percent over the previous quarter. I rather suspect, though, that the aging eMac’s sales made very little impact outside of the educational market.

    To add insult to injury, effective next quarter, Apple will only report total sales of desktop and laptop computers, without breaking them down into specific models. The iPod is getting the same treatment already. So Apple isn’t saying how many of the 5,311,000 iPods sold fell into the iPod mini and iPod shuffle category.

    In reporting total revenue of $3.24 billion, it’s clear Apple is on a roll. Last year, the figures amounted to $1.91 billion. Profits totaled $290 million, or 34 cents a share, compared to $46 million, or 6 cents a share, a year earlier. Despite the higher sales, it is earning less money from each unit sold, because the cheaper models are more popular. The Power Mac, for example, continues to suffer, with sales of just 147,000 units. That’s 19% less than last year, and, yes, it includes the Xserve.

    So what is Apple to do about its professional desktops? Some suggest that more and more potential buyers of the high-end systems are opting for iMacs, which offer performance that’s more than sufficient for most purposes. Others claim that Apple’s inability to reach the magic 3GHz processor speed, first promised two years ago, is a significant factor. Maybe, maybe not. But I am skeptical that it makes that much of a difference. If someone needs a new computer, a mere 500MHz in speed isn’t going to lose a sale. Rather, I think Apple needs to bite the bullet and cut the prices. Now if the dual 2.5GHz Power Mac could be purchased for $2,499, and the basic 1.8GHz system weighed in at, say, $1,199, I think Apple would sell more than enough additional units to make up the loss of profits. I mean, you can buy a basic iMac G5, which includes the 1.6GHz processor and 17-inch widescreen display in one box, for $1,299. Why pay $1,499 for a Power Mac that’s only slightly faster, and comes without a display?

    Sure, you can say that the Power Mac is more expandable, but how many of you actually add anything to these computers except for RAM? Think carefully now. So the extra girth and slight additional speed just isn’t worth the extra expense. In fact, a Power Mac at $1,099 is an even more compelling deal, but that might be pushing it. I don’t see Apple going that far.

    On the music front, though, Apple is still blowing away the competition. The wannabe music players and subscription music services still aren’t making a dent of any significance. For example, the iPod is number one in both the hard drive and flash market right now. The shuffle’s rise to ascendancy is almost dizzying, from zero to a 43 percent share in less than three months. The regular iPods retain their 90 percent share of the hard drive player arena.

    Now as to the iTunes Music Store, according to Apple, a Nielsen Soundscan report lists the store as still holding a 70 to 75 percent share of the commercial download music market. So it really doesn’t seem that Napster To Go is doing anything but taking away sales from other subscription services. I suppose that controversial Super Bowl commercial really did turn people off big time, even though Napster is reporting a pretty good revenue growth. It’s just not enough, and it’s clear Apple has no compelling reason to change its iTunes sales scheme, at least for now. In the end, though, I still believe that Apple will, some day, consider a subscription option as an alternative.

    So what about the effects of the iPod halo effect? Although total sales figures for the PC box makers are not yet available, the conventional wisdom has it that Apple is outpacing the market and will apparently gain a bit more market share. During a conference call with financial analysts, Apple CFO Peter Oppenheimer said that sales to new Mac users at its retail stores remains in the “low to mid 40 percent” range. We now know that those figures are based on phone surveys after the sale.

    Now as to the current quarter, getting Tiger out before the end of this month is clearly going to have a big impact on Apple’s software sales. In all, it is predicting total sales will amount to $3.25 billion with earnings of 28 cents per share when it reports the results in July. This is somewhat ahead of what the so-called Wall Street experts are predicting, but it’s also true that Apple almost always beats the street.

    In the end, though, while I’m pleased Apple is on a healthy growth curve, I’m really disappointed that we’ll never know just how many Mac minis contributed to the extremely positive sales figures.

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