Apple showing growth in an otherwise declining PC market
Apple (AAPL), on Wednesday, came out with its fiscal Q2 2014 earnings, in which it mentioned that it managed to sell 4.1 million Macs which was a growth of 5% over the same quarter last year. It is a well known fact that PC market is undergoing a structural decline, and showing growth in this market bodes well for Apple. As per the chart below, Apple has managed to grow its Mac business in the last two quarters, with growth rates of 19% and 5%, respectively.
PC market sales getting cannibalized by tablets and smartphones
Lenovo (LNVGY) has emerged as the leader in the worldwide PC market, closely followed by HP (HPQ), and Dell (DELL). Gartner recently came out with a report claiming that the PC market declined by 1.7% from 77.9 million in in Q1 2013 to 76.6 million in Q1 2014. This decline was slower than expected mainly due to the end of XP support by Microsoft (MSFT) which triggered the PC refresh cycle. However, future sales of PCs should undergo more decline as tablets and smartphones becomes the preferable household device.
MacBook Pro and MacBook Air helped Apple gain market share
According to Apple, thanks to the strong performance from MacBook Pro and MacBook Air, Macs have now gained in global market share for 31 of the last 32 quarters. Strong sales also helped Apple by ending the quarter with Mac channel inventory slightly below its four to five week target range. Making OS X free also helped Apple. Apple’s management commented, “We continue to gain share in the personal computer market as well. We defied industry trends again by growing while the market contracted. Our bold decision to make OS X free has resulted in the largest ever percentage of the Mac installed base running on the latest version of the operating system just months after its release.”