How Apple sliced its pie in 2009

I really dont believe windows 7 will bring back mac users. Still, both OS are so similar that the Mac adoption may be reduced..
divorcio

Hmm, I wouldn't say the iPhone is even comparable to a laptop. Would you rather have a laptop or an iphone? I think I'll take the laptop. Can you build websites with an iphone? Can you program on it? Play intensive 3D games? Watch country guitar lessons on it?

Lets keep in mind that the iPhone is a phone, iPod, and a laptop computer in the palm of your hands with 100,000 apps. Why lug around a laptop to school or work when you can do everything with the iPhone?

Windows 7 will have no bearing on current mac users because you can install windows xp,vista or 7 on a mac on one piece of hardware. You get the best of both worlds with a mac. Mac users can use windows for business if needed.

I'm not a Mac or a PC!!! I'm a human!!Are you a computer who is easily programmed or a thinking and breathing human??????? Both companies seem to consider you as mindless hardware and software, wake up sheep!

Anytime people become fanboys of ANY company they lose their objectivity. Most importantly they hurt the company as it slowly errodes innovation. The same goes for both MS and Apple. We should hope that both continue to put out better products as that promotes competition. The product bashing both ways it nuts! Both companies would sell your mother if it profitted them.. There is no david vs. goliath here.. it's huge company A & B and google is moving into C. Pick what system works best for what you want at the best price and quit being sheep on either side. I'm not a Mac or a PC.. Are you a computer who is easily programed or a thinking and breathing human???????

The change in the relative size of the slices is interesting but not any cause for concern. The smallness of the drop in Mac revenue (Macs are their biggest ticket item) at a time of major financial recession would be cause for celebration for other computer producers, almost all of whom fared worse.
And it must not be forgotten that, while the cannibalisation of iPod sales by the iPhone has been widely commented on, there is also a lesser cannibalisation of Mac notebook sales by the iPhone.
Under the circumstances, these are very good results for Mac revenue.

The drop in Mac and iPod sales is troubling to me. I don't believe enough is being done to keep the interest in these important products. The iPhone while a hot item now, is just that a currently hot item. It is subject to ever increasing competition, and while I don't think any one smart phone will come up to challenge it, each new competing model will keep the iPhone from growing at the fantastic rate it has seen to date. The other upcoming problem with the iPhone is Verizon, T-mobile, and Sprint…they are starting advertising campaign that are much like the ones Apple uses against the PC. This is going to hurt the iPhone.

Mr. DeWitt – You and I talked about this very issue a few months ago in a few emails. In those emails, you reminded me to keep in mind yet another leg of the stool… the channel contribution of the Retail Stores.

Here is your quote: "As it happens, Needham's Charlie Wolf had a report out Tuesday that calls the Apple Store the fourth leg of the stool. I've got a piece coming out tomorrow that focuses on the unflattering things he had to say about Microsoft's plans to open its own stores."

Just curious as to why you didn't show retail store contributions. I assume that perhaps the channel the product is sold through (Apple retail store, Apple online store, retail partners and resellers, Apple 800# sales) is immaterial to the final recording of the goods sold.

Is that it?

Thanks

ex ped: That pie chart showed sales by product line, no matter where or how they were sold. In a separate part of the 10-K, Apple reports that Apple's retail operations accounted for $6,574 million in sales, more than a third of its $36.5 billion total net sales.

Bruce: 'MAC' stands for media access control as you probably well know. Mac is short for Macintosh. The sheep are the ones sitting in front of Dull PCs and wretched plastic craptops from Acer and the like, unaware that a much better experience is available.
Mac users are Mac users because they made a conscious decision to take the red pill.

The web forums are filled with Bruces, stuck feeding Micros**t's relentless appetite for their money. It would be easy to be sympathetic but the sheer amount of maleficence I read online indicates that they're actually happy to continue with the cycle of abuse. Who would spend time and energy advocating cheap, inferior products???

As for Apple, they sold record numbers of computers in the middle of a devastating recession, AAPL stock is at an all-time high, Snow Leopard is lithe and fast (refreshing after W7's heavy-handed ugliness), the iPhone is still the one to beat and Apple products rank highest in user satisfaction in every single poll. The MBP line is absolutely delicious, the iPod 'fad' continues unabated and the new iMac has no PC equivalent.

Tell me again how W7 changes anything?

Apple=>End User Satisfaction!!!

Too many cooks to make the Windows soup:

Microsoft=>Box Makers (Dell, HP etc.)=>End User Satisfaction???

You have to take the non-GAAP and GAAP separately. iPod¨s and iPhones makes much more than you represent here.

@Erick, Vancouver: "You are suggesting that iPhone revenue is inflated by subscription accounting and is in actuality still behind: this is completely ass-backwards."

PED's use of "swelled" was in reference to the disproportionate 266% y/y *growth* in sales, when compared to the 78% growth in units.

In absolute terms, yes, GAAP iPhone revenue is being understated, and thus its share of total revenue, as I mentioned in my previous comment.

However, the non-subscription y/y growth is 86%, comparable to the unit growth, so that astounding GAAP growth figure is, as PED correctly put it, swelled by the subscription accounting.

Love the WinZealots who call switchers, "simple minded", when in fact, the simpletones are the ones who don't do any research on their own and just buy what the "salesman" at the Walmart and Best Buy told them to purchase.

The largest chunk of sales for Windiws doesn't come from people upgrading the OS on their current systems, it comes from new hardware sales. Microsoft knows that without sales of new modern hardware, you cannot move technology forward. This is exactly why retail copies of Windows costs several times more than OEM cooks and almost half the cost of buying a brand new system with it preinstalled.

Apple is doing it's own thing now, Apple has new fundamentals compared to the 90s and Windows 7 doesn't change those new fundamentals.
1. OS X is a stable, modern, mature OS (Apple didn't have that in the 90s)
2. Apple is an extremely efficient, well run company, keeps inventories low with a highly focused product line up. (Also not true in the 90s)
3. iPhone, iPod and iTunes will continue to provide a halo effect for all of Apple's product lines. (Nothing similar for Apple in the 90s.)
4. Apple retail provides Apple with highly visible, strategic locations for people to see and experience how Apple products work in the best environment possible. Again, nothing like Apple retail existed in the 90s. Plus, Apple retail is inevitably located in high dollar locals where people have money to spend, recession or no.

Sure, Vista might have been crappy, but Apple has put an entire ecosystem in place that doesn't depend on Microsoft's crappiness anymore.

Jack, I'd like to think it that way but I think Win7 will have some effect more or less on Apple. With the large market share and good news about Windows7 lately, most people and actually lots of people are finally upgrading from their XP machines to Win7 and most of these people were the ones who did not upgrade to Vista. I can confidently say XP is still most widely used, and if probably 50-60% were to upgrade, it will affect Apple. Just my 2 cents. google sniper

Hate to disappoint, but, I do not think Win7 will effect Apple at all. It will only be purchased by those who are Windows washed. As an example, I have XP on the desktop machine, and use a MAC aluminum that is 5 years old. XP does what I need. I don't feel like spending a day upgrading at all. And, when I need a new laptop, it will be a MAC. My brother (always a Crapple guy) must be trembling at my conversion.

Edit: forgot to enter my name!

I doubt that Windows 7 will cause many Mac users to switch back to a PC. I have only met a small handful of Mac users who would even consider switching back to a PC. However, I think Windows 7 will slow down Mac adoption rates, which has increased significantly in recent years.

PED said, "The iPhone, meanwhile, is rapidly catching up, thanks to unit sales that grew 68%[...]"

iPhone unit growth was 78.3%.

Additionally, when you look at the non-GAAP revenue shares, I'm not sure you can still say the iPhone is "rapidly catching up" when it's now neck to neck with the Mac for the top spot:

FY09 non-GAAP revenue shares:
Mac: 32.2%
iPhone: 30.5%
iPod: 18.9%
iTunes: 9.4%
SW: 5.6%
Periph: 3.4%

It's already beaten the Mac on a quarterly basis in the last two September quarters, and I expect it to keep the top spot (some quarters by a nose) in the foreseeable future.

ex ped: Thanks for the unit sales correction. Fixed. I stayed away from non-GAAP revenue to keep things simple, but I'm sure you are right.

The iPhone, meanwhile, is rapidly catching up, thanks to unit sales that grew 68% and revenue (swelled by deferred revenue dating back to 2007) that grew 266%.

Yet another trivially superficial analysis. Why am I not surprised?

You are suggesting that iPhone revenue is inflated by subscription accounting and is in actuality still behind: this is completely ass-backwards. iPhone is selling far better today than it was in 2007. Therefore the effect of deferring revenue (a practice Apple has announced they will continue until 2010) is to DEFLATE the true iPhone income.

The reality (based on the assumption that most of the discrepancy between GAAP and non-GAAP is due to iPhone) is that iPhone is already ahead of iPod and "caught up" a long time ago. The latter half of 2008 was particularly strong (it was the year of iPhone 3G, after all).

@VK in Seattle,

Think about the numbers. MSFT has to sell Win7 to more current Mac/Linux users than Windows users who are buying Macs. Selling Win7 to even 100% of the Windows users does nothing in terms of market share. That's the only way they gain market share. And I don't see that happening. Ask this question: how in the world did Apple sell 3M+ Macs (the most ever in a quarter) in a recession? How did they do that? My guess is they would have sold 6M had we not been in a recession.

There is a trend here. People are fed up with Windows and willing to spend a little more for something that works. What other explanation is there? How does Apple continue to sell Macs that some Windows' users feel are over-priced in this economy? It defies logic. It wasn't a fluke. MSFT needs to answer that question.

What's unavoidably missing from this chart is the sales venue. I'd be interested in seeing a breakdown over time on how much business is coming in via the physical Apple stores, other stores, the online Apple Store, and the various catalogue and online sales. Also, it'd be nice to include which type of product sells best in which venue.

My take from these pie charts is that Apple now has a more diversified product portfolio. They are not solely dependent upon the success of any one product line. While the Mac sales constitute a smaller overall percentage, they are selling Macs now in record numbers. 10+ years ago, they were lucky to move 600,000 units per quarter. Now, they sell more than 3,000,000 units per quarter. That's especially impressive when you consider these are all considered "high end" sales as Apple doesn't compete in the margin-less low end market like netbooks, etc.

@vk seattle, your comment about Win7's affect on Apple is baseless. History has proven that Apple's sales have benefited from each Windows release. There are many such articles on the web which discuss this. Here's a random one from a quick Google search. http://www.newsfactor.com/story.xhtml?story_id=10200CIIN1AU

Similarly, while Win7 has been getting pretty good reviews, none are rating it as being better than Snow Leopard. Microsoft has been closing the gap somewhat, but that's not enough to draw any existing Mac users over to the Windows camp. Microsoft's best case scenario is that the Win7 slows the transition to Macs beyond the current pace.

Windows 7 may end up swaying the iSheep to come back to the Microsoft camp. We'll see how it goes over the next few quarters. With enough brainwashing, I mean advertising, Apple was able to influence a lot of simple minded folks to buy MACs. Interesting to see if it works in the opposite direction.

Hate to disappoint, but, I do not think Win7 will effect Apple at all. It will only be purchased by those who are Windows washed. As an example, I have XP on the desktop machine, and use a MAC aluminum that is 5 years old. XP does what I need. I don't feel like spending a day upgrading at all. And, when I need a new laptop, it will be a MAC. My brother (always a Crapple guy) must be trembling at my conversion.

Release on Win7 will be a major setback to Mac business which is the biggest pie in this chart. Apple is currently over priced and it's time to sell Apple.

"Steve Jobs likes to describe Apple's (AAPL) business model as a stool build on three-legs: the Mac, the iPod and the iPhone."

It should be "built"

ex ped: Thanks. Fixed.