July 24, 2009, 2:33 PM — Do you want to hear some crazy numbers? Macs -- not iPhones, mind you, but Macs -- are dominating one of the market segments in which they compete, making up almost 91 percent of sales. 91 percent! Those are Microsoft-monopoly-level numbers, right?
That segment, in keeping with the company's elitist image, is the so-called "premium PC" market. "Premium" certainly sounds fancy, but in fact it comprises computers over $1,000. I found 91 percent of a market share for Apple disorienting, but perhaps not as much as learning that a mere $1,000 computer -- which not so long ago I would have thought of as an entry-level machine -- is now a high-end luxury product. In fact, the average computer today sells for $701, and that's with the fancy Macs in the equation; the average Windows machine sells for only $515.
Overall, Macs make up only 8.7 percent of PC sales. This number is leagues ahead of the company's typical 2-3 percent shares of only a few years ago, but it's still the mirror image of the premium computer sales, and thus indicates the real reason for that shocking number: PC prices have simply collapsed, and the other manufacturers are concentrating on netbooks and have simply abdicated the high end to Apple. And perhaps this is not a bad position for the company to be in! After all, the iPhone is only a sliver of the phone market but a much larger share of the profits.
As I was contemplating this, I came a cross an Apple Blog post about Steve Ballmer that mostly consists of the entertaining but cheap Ballmer-bashing shots typical of the Apple blogosphere. However, thinking about these premium-dominating Apple numbers, a couple of Ballmer quotes from the article jumped out at me. When asked for his reaction to the iPhone in 2007, he said, "There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get."
Now, set aside the fact that he's talking about phones, not computers -- because I'm assuming that his attitude about computers is going to be more or less the same. I think it's interesting that he says "They may make a lot of money," then dismisses that by claiming that his platform will dominate in terms of volume. Volume is something to be obsessed with, surely, especially in the context of running publicly traded corporation whose shareholders demand growth. But isn't making a lot of money really the whole point? And if you can make a lot of money by selling fewer computers at much higher margins -- well, there's something to be said for that strategy that ought to fend off the demands for a $400 Apple netbook. After all, when Apple and MS's quarterly numbers were compared this week, Apple sure came out looking better.