Apple's Personal Computers Lose Market Share -- Should You Worry?

A new report suggests that Apple's (AAPL) share of the personal computer market is slipping. Here's what investors should expect.
By Kat McKerrow ,

The headlines are giving Apple (AAPL) - Get Report haters yet another reason to dismiss the technology company's stock. Is there really cause for concern, however, or is Apple still a juicy long-term investment, ripe for the picking?

A report recently released from analysts at IDC indicates that global demand for personal computers declined yet again during the second quarter of 2016 and that Apple is taking the brunt of the pain.

For the quarter, 62.4 million personal computers of all brands were sold, a 4.5% year-over-year decrease from the second quarter of 2015. This decline is bad, but not as bad as the 7.4% decrease the analysts had previously been expecting.

The report also found that the U.S. is the best-performing market for PCs, due to dollar strength plus relative market stability and security.

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That stability and security seem to have abandoned Apple's PC business, however, at least for the second quarter. IDC's analysts traced a fall in Apple's market share, to 7.1% in the most recent quarter from 7.4% in the second quarter of 2015. The dominant players in the PC space are now Lenovo, Hewlett-Packard and Dell.

Time to panic and sell Apple as the MacBook dreams are dashed?

Not so fast. IDC said that Apple's fall is not necessarily due to any fundamental flaw within the company or its products. Instead, the reason is simple: Apple just hasn't significantly updated its MacBook range for a while. Therefore, Apple's competitors have a better edge than they had last year.

This echoes what we've been telling you about Apple: The company's business model is highly cyclical. Apple depends on the release its "next big thing" to accrue huge profits, and in return, to make millionaires of its faithful investors.

Just as sales of Apple watches, phones, and iPads are forecast to pick up once new and refreshed models are released, Apple should gain back its market share when there's a new MacBook for its legions of fans to get excited about.

This business model makes Apple an exciting investment play for those who want to bet on the "next big thing": Invest when there's nothing new and the stock is on the low side. Then, when the next big MacBook or iPhone or Watch is released, collect profits on the inevitable upswing.

On the other hand, Apple is a stock that is going to keep on growing in the long run, so you could also treat it as a long-term play. Like other classic blue-chip plays, Apple is a stock to depend on for steady gains over the years.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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