Publish date:

Apple's Macs Gain Market Share

Redesign, environmentally friendly casing and added memory help boost sales.



(AAPL) - Get Report

continues to increase its share of the personal computer market, pointing to another strong quarter of sales and profit gains.

In the third quarter, Apple's Mac computers accounted for 6.3% of all PCs sold, up from 5.7% a year earlier, according to estimates from IDC analysts. This growth means that Apple pulled further ahead of its competitors as it increased its lead as the No. 3 player in the market, a position it took over earlier in the year.


(HPQ) - Get Report



(DELL) - Get Report

remain No. 1 and No. 2.

TST Recommends

The results suggest that Apple will report another quarter of stellar revenue and profit growth on Oct. 22. The Macintosh computer has been a mainstay of Apple's business since its inception. Mac sales have stood out for their increasing contribution to Apple's sales. In the first nine months of the company's fiscal year, the Mac accounted for 41% of the company's total revenue, up from 36% during the same time last year.

"I think that Apple's primary focus is and will continue to be PC," said Kirk Kim, a portfolio manager with Transamerica Investment Management. "In end, the PC game is still more profitable than the iPod or iPhone."

Investors hope the popularity of the Mac's sister products--the iPod and the iPhone--will further bolster Apple's personal computer sales by highlighting the company's sleek designs and user-friendly features to a broader audience.

Early indications suggest that this "halo effect" has taken root. Mac sales have accelerated in recent quarters as consumers bought tens of millions of iPods. In the previous quarter, Mac revenue and unit sales growth outpaced iPod sales figures by a wider margin than in the past. That growth preceded the school shopping season, typically the time of year when Mac sales peak.

The Mac's growing popularity may also stem from Apple's redesign of the computer as well as the company's audiovisual software that runs on it. In August, Apple unveiled updated Macs with a new form, environmentally friendly aluminum casing and added memory and graphics capabilities. Apple also cut the price of the high-end Mac by $200 to $1799 and the price of the smaller model by $300 to $1199.

At a press gathering in August for the debut of the new Macs, Chief Executive Steve Jobs demonstrated how Apple's iLife software lets users easily create and edit home movies, and post digital photos to their blogs.

Earlier this week, the company set a date to release its new Leopard operating system.

Citigroup analyst Richard Gardner recently raised his fourth-quarter estimate of Mac sales to 2.17 million units, up from his original forecast of 2 million. If Gardner's figure is accurate, that would represent a nearly 70% jump in Mac unit sales.

Apple nonetheless remains a distant competitor to HP and Dell, which hold the two top spots for PC sales. But its small market share means that any incremental gains translate into an outsized increase in sales and profit.

"If they could get their (PC) market share into the double-digits, that alone could double the size of the company," said Transamerica's Kim.

Apple shares were recently trading up $1.22, or 0.7%, to $173.97, above an all-time closing high of $172.75 reached Wednesday.