Vista sold more PCs than Windows 7 did
Microsoft moved a lot of install disks, but hardware makers got a bigger bump two years ago
Photo: Philip Elmer-DeWitt
When Microsoft (MSFT) launches a new operating system, as it did two weeks ago, PC manufacturers like Hewlett Packard (HPQ), Dell (DELL) and Acer are supposed to reap the benefits. And everything seemed to be in place on Thursday Oct. 22 for that to happen.
"Never before has the industry launched such a variety of new form factors, price points, technology upgrades, and design innovations at one time," wrote NPD's Stephen Baker just before Windows 7's release. "This past weekend I happened by a Best Buy store and there was not one single PC for sale with Vista on it. Lots of Windows 7 machines, however, all of which were marked 'not for sale until October 22.' Someone did a great job in the supply chain making this happen. This will give Win 7 a tremendous boost out of the gate." (link)
Two weeks later, Baker is singing a different tune. Microsoft got a big boost according to NPD's weekly tracking data, racking up sales of Windows 7 that were 234% higher than Vista's during its first few days of sales. (More on that below the fold.)
But PC makers didn't make out quite as well. Although they had a relatively strong week, with unit sales up 49% year over year and 95% from the week before, it was nothing like Vista's launch in Feb. 2007. Then, sales soared 68% year over year and 170% from the week before.
In a press release issued Thursday, Baker explained what happened:
Mac share grew after Windows 7 debut
Microsoft has not halted Apple's momentum, according to Net Applications' October report
Source: Net Applications
If Microsoft (MSFT) was hoping that the launch of Windows 7 would halt the erosion of its operating system market share — and curb further inroads by Apple (AAPL)Â — there is no evidence that it's working yet.
In fact, preliminary data released overnight Sunday by Net Applications show Mac OS X's Internet share growing by 2.73% in October, from 5.12% to 5.26%.
Windows' Internet presence, meanwhile, fell from 92.77% to 92.54% — its ninth loss in 12 months. Windows 7's share, however, was more than 2% even before its Oct. 22 general release, thanks to widespread use of early release versions. By Oct. 30 the Windows 7 portion was 2.85%, largely at the expense of Windows XP, according to a separate Net Applications report.
Net Applications, it must be noted, is not measuring share of market in the sense of sales revenue or unit sales. Rather it tracks the presence of various operating systems on the Internet by sampling browser data from visits to its clients websites — some 160 million hits per month. It's a methodology that tends to favor devices that make it easy to navigate the Web, which explains the relatively high "market share" of the iPhone in the firm's monthly surveys.
You can see Net Applications' October report here. The results are summarized in the chart below.
How Apple sliced its pie in 2009
The Mac and iPod slices shrank between '08 and '09. iTunes grew a bit. iPhone grew a lot.
Source: Company reports
Steve Jobs likes to describe Apple's (AAPL) business model as a stool built on three-legs: the Mac, the iPod and the iPhone.
But a quick glance at the 2009 Form 10-K, which Apple filed on Tuesday, shows that it is now more like a four-leg chair, with a couple of wedge-shaped pillows on the side.
The Mac and iPod still bring in the biggest part of Apple's total sales revenue — 37.7% and 22.1%, respectively — but their shares of the pie are shrinking.
The iPhone, meanwhile, is rapidly catching up, thanks to unit sales that grew 78% and GAAP revenue (swelled by deferred revenue dating back to 2007) that grew 266%. The iPhone now accounts for 18.5% of Apple's sales, just behind the iPod.
The fourth leg of the chair is the line item Apple calls "other music related products and services" but which is mostly iTunes Store sales — music, video and apps. It continues to grow at a steady pace and now represents about 11% of Apple's net sales.
Spreadsheets summarizing Apple's revenue streams are pasted below the fold. Apple's 2009 Form 10-K is available as a pdf file here.
How Apple is gaining on Microsoft
Both companies beat expectations last week, but only one of them was growing
Click to enlarge. Source: Company reports, Oct. 2009.
A year ago we ran a bar graph similar to the one at right. It showed that Apple (AAPL), despite the Mac's tiny market share compared with Microsoft (MSFT) Windows, was gaining on the software giant. The main reason: revenue pouring in from the iPhone but hidden as deferred earnings in Apple's balance sheet. (That chart is posted below the fold.)
Last week Apple and Microsoft once again reported quarterly earnings — and enjoyed nice pops on the stock market. But their growth rates turn out to be very different.
This quarter, deferred iPhone revenue isn't as big a deal for Apple as it was last year (non-GAAP earnings actually grew more slowly than GAAP; see here for why). Ironically, it was Microsoft that had to use deferred revenue from Windows 7 to show any growth at all. Otherwise, Microsoft's revenue for the third quarter was down 14% year over year and its earnings down 17%.
Apple's revenue, meanwhile, grew 25% and its income 46.6%.
Apple store back up. New Macs today.
The rumors of a flurry of new machines were true
Photo: Apple Inc.
UPDATE: Apple's online store came back online shortly before 1 p.m. Eastern with new iMacs, a new MacBook, a new Mac mini and a new "Magic" Mouse (the Mighty Mouse having run into trademark problems). The products are displayed on the reconfigured website and described in a series of press releases:
Apple's website describes a new "mightier" mini, but no press release on that yet.
- – - -
Apple's (AAPL) online store went off line Tuesday morning, adding fuel to rumors that it held its quarterly earnings call a day early to clear the decks for the release of some new hardware.
The Apple blogs have been predicting this for weeks, none more succinctly than Daring Fireball's John Gruber, who responded to a provocation from Dan "Fake Steve Jobs" Lyons with this cryptic note:
Unseemly for the Fake Steve character to be so wrong (or, frankly, even to care) about what I know.
By Thursday, I'm sure everybody will be talking about Windows 7 again.
[Follow Philip Elmer-DeWitt on Twitter @philiped]
Apple earnings: How the analysts got it so wrong
Everybody failed to predict Cupertino's blowout quarter, but some failed worse than others
Smackdown: See full spreadsheet below
"Well, that was quite embarrassing!" writes "deagol," a widely read amateur analyst whose estimate of Apple's (AAPL) fourth quarter earnings fell 16% short of the record profits the company reported Monday.
The irony is that deagol, who filed a long post-mortem mea culpa on his website Monday night, had less to be embarrassed about than 18 of the 19 Wall Street analysts we polled in advance of Apple's fiscal 2009 4Q earnings report. (See The Street awaits Apple's earnings.)
Once again, the amateurs and independents out-performed the professionals in our quarterly Apple analyst bake-off. The color-coded spreadsheet is pasted below the fold.
But first, some general comments about why everybody failed to predict that Apple's profits would grow 46% or that the company would sell a record 3 million Macs — up 17% in a quarter in which its competitors, selling cut-rate Windows boxes at razor-thin profit margins, grew an anemic 2%. (See here.)
The key misses:
Apple earnings set new record; shares explode in after-hours trading
So much for expectations. Apple (AAPL) blew past them all — its own and those of a crowd of increasingly bullish analysts — by reporting its most profitable quarter ever, earning $1.82 a share on revenue of $9.87 billion for the fourth fiscal quarter of 2009.
The Street was expecting quarterly earnings of $1.42 on revenue of $9.2 billion, according to Thomson Financial.
Apple's shares exploded in after-hours trading. Having closed at $189.86, shares leaped more than 13 points in the next hour and 40 minutes to $202.87 — one thin dime away from the all-time high of $202.97 set in intraday trading on Dec. 27, 2007.
Sales for the year were a record $36.5 billion, up 12.5% from 2008. Earnings per share for the year topped $6.29, up more than 17% from the year before.
Strong sale of iPhones — following price cuts and the introduction of a new model — helped boost Apple's earnings.
But the big surprise was the Macintosh. Apple sold 3.05 million Macs for in Q4 — a 17% increase from same quarter last year — thanks to its new Snow Leopard operating system, re-energized back-to-school sales and a big order from the state of Maine.
"We are thrilled to have sold more Macs and iPhones than in any previous quarter," said Steve Jobs in a prepared statement."
Highlights from Apple's earnings report include:
Retail data show Mac sales up 13%
Photo: Apple Inc.
Several analysts waited until Monday morning — the same day Apple (AAPL) is scheduled to release its quarterly earnings report — to send clients their estimates of the company's unit sales (see here). But Piper Jaffray's Gene Munster waited longest of all.
Munster released a note at 1:54 p.m. Eastern — about two and a half hours before Apple's results are due to hit the wires — with his latest estimates for Mac and iPod sales.
He was waiting for data from the NPD Group, which surveys U.S. retail outlets and reports sales of a variety of goods — including electronics — on a monthly basis.
According to Munster, NPD data for the past three months show domestic Mac sales up 13% year over year, which implies unit sales of 2.85 million to 2.9 million. Factoring in international markets, however, Munster suggests that total Mac sales probably grew somewhere between 9% and 11% year to year — roughly double the 5% growth the Street is expecting.
The news for iPods was not quite so encouraging.
The Street awaits Apple's earnings
What's Wall Street expecting this quarter? The 22 analysts we polled are all over the lot
Merck, McDonalds, Microsoft, Boeing, Coca Cola, Dupont and AT&T are among the bellwether companies reporting earnings next week, but when the markets close on Monday, all eyes will be on Apple (AAPL).
Wall Street blows hot and cold on Cupertino. Apple shares have been on fire for most of the year, and after see-sawing for much of the day they rose up sharply in late afternoon trading to close at $189.86, up 0.96%. The stock has rocketed more than 120% since January, outpacing the Dow by nearly 9 to 1 and leaving analysts scrambling to keep up. Nearly all have adjusted their estimates in advance of Monday's report, some rather dramatically (one of them raised his price target from $70 a share to $250 in the space of seven months).
Apple analysts scramble to catch up
With the stock hovering within 10 points of its all-time high ($202 per share, set nearly two years ago), the question for many traders is whether it has much further to go — which is one of the reasons they'll be closely watching Monday's earnings report.
The Street is looking for Apple to earn $1.42 a share on revenue of $9.2 billion, according to Thomson Financial's consensus, although the revenue estimates of the 20 analysts we polled ranged from $8.37 billion to $9.72. That's a difference of $1.35 billion — enough to fund a small land war — but this time the most optimistic estimates come from big Wall Street firms, not the unaffiliated analysts who have tended in the past to be the most bullish on Apple. (See chart below the fold.)
