Parsing the Mac implications in Apple's Q3 earnings call

Parsing the Mac implications in Apple's Q3 earnings call

Summary: While most industry watchers looked at iOS mobile sales figures revealed in the company's recent Q3 earnings call, Apple executives appeared to be pitching a Mac story. And an interesting one.

TOPICS: Apple, IBM, iOS, iPhone, iPad, Windows
Parsing the Mac implications in Apple's Q3 earnings call
(Image: Apple)

In the distant past, during the first golden era of Macintosh in the late 1980s, the Mac was a general business computer.

Newcomers to the Mac may be surprised at this news. There were developers offering Mac-centric, number-crunching products to a variety of business segments, from the enterprise to small and mid-size businesses. There was a thriving market of independent software vendors making custom software for the platform.

As we know, the PC supplanted the Mac in these segments — remember the "nobody is fired for buying IBM [meaning PCs]" line? The Mac was relegated to creative content markets, with some holdouts in many, but not all, segments.

As announced, Apple's forthcoming Mobile First integration service with IBM is aimed at bringing iPad and iOS to the business markets. However, with Apple once again looking squarely at business customers, the Mac must be seen to be in play. It sounded to be so when listening between the pauses during Apple's recent fiscal Q3 conference call with financial analysts.

Apple Chief Financial Officer Luca Maestri said that in the third fiscal quarter, 4.4 million Macs were sold, an increase in 18 percent from the year-ago quarter. The hot ticket was the MacBook Air: large deployments of MacBook Airs led Mac growth in the education segment, he said.

The current installed base of Macintosh is 80 million as of June, Apple said at its Worldwide Developers Conference. If the same number of Macs are sold in the fourth quarter — and it should be better, with back-to-school sales in September — the Mac installed base will grow to 98 million, almost 100 million units. That will be a 22.5 percent annual growth rate.

In the near future, Apple is eyeing growth in large- and mid-sized businesses, for iPad, of course, but also for Macs. According to CEO Tim Cook, the iPad has penetrated the Fortune and Global 500 enterprise. However, he said that in the "commercial sector," Apple iPad is at 76 percent. But in the plain "business" segment, acceptance of Apple iPad is low, at 20 percent. Cook gave this as the reason why Apple went into its Mobile First partnership with IBM. "A substantial upside in business," he predicted.

"This was one of the thinkings behind the partnership with IBM that we announced last week. We think that the core thing that unleashes this is a better go-to-market, which IBM clearly brings to the table. But even more importantly, apps [will be] written with Mobile First in mind. Not all, but many, of the enterprises apps that have been written for iPad have been essentially ports from a desktop arrangement, and haven’t taken full advantage of mobile.

"And so we're excited about bringing that to business along with partnering with IBM, which we think is a first-class company. And seeing what that can do to sales of business, which I honestly believe the opportunity is huge."

Apple expects to grow its tablet penetration in this business market from 20 percent to 60 percent, in a market of some 350 million units.

While Apple leads with iPad, the pull of this strategy is Apple's "ecosystem," computing solutions that express the deep integration of Apple products, which means Macs. The ecosystem includes iOS (the mobile platforms of iPad and iPhone), OS X (Macs computers and servers), quality applications, iCloud and advanced Apple IDEs.

And with the Mobile First initiative, there's a solid business hook, one that will bridge the existing PC-based in-house apps, services and data, to the new Apple platforms.

This rich tech stew was aimed squarely at potential "switcher" customers who are currently running Apple products with Windows machines. Apple is, after all, one of the world's biggest Windows developers. While Windows users are Apple's predominant base for its iOS platform, Apple wants to give them new reasons to join the Mac fold, making them full members of the ecosystem.

When we hear the term "switcher," we mostly think of individuals moving from one platform, Windows, to another, the Mac. However, switchers will now be large businesses, rather than an individual here or there in a PC-centric organization. After all, if companies can be declared persons for legal purposes, they also can be so when deciding on computing platforms. Or at least Apple hopes so.

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Topics: Apple, IBM, iOS, iPhone, iPad, Windows

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  • What?

    Yawn! The Apple 17% growth by itself doesn't mean any of what you are alluding to without further information. For all we know, the 17% increase could all be increased channel sales. Not saying it is, but the point is we don't know that it isn't either. And please, before the silly comments start about Apple only reporting final sales to consumers, Apple like Dell or HP is also required by way to report it sales to Best Buy for example in its sales figures.
    • correction

      I meant required by law. Not by way ...
    • Channel inventory is down YoY.

      So not a yawn. Apple provides insight into channel inventory so we do know that. The most interesting aspect is how wrong the so called analytics companies were on Apple's US contraction. From a supposed 1.7% decrease in sales in the U.S. to a confirmed >10% increase in US sales.
  • Locked to hardware

    As long as the OS is locked to hardware is completely unusable in a modern enterprise environment. Sorry Apple, this is the virtual era. They also do not offer support time guarantees which are mandatory for business use.
    Buster Friendly
    • The only hardware I see at work is Dell.

      Nothing else. 100.000% Dell. No different.
      • Locked to hardware and no long term support

        In terms of Macs, Apple will never see any major move into the enterprise sphere. Enterprise would still need to use a tool like Active Directory for management, and with Apple releasing a new operating system every year that only supports a limited number of their own systems, and the new OS making so many changes that break even Mac only workflows, Apple would have to change its entire way of operating to give the enterprise the support it wants and expects.
        • You described the Win2k to WinXP to Win7

          Migration. The number of tools and workflows that were broken and disrupted with those transitions were astounding.

          So how is OS X different?
      • But it doesn't have to be

        Your company may use Dell but they don't have to. If they don't like Dell's service or prices, they can buy another vendor. We actually ditched Dell for Lenovo for our desktops. Apple on the other hand you cannot license the software to run on anything but their branded hardware.
        Buster Friendly
        • After 15 years of sub-par service.

          I doubt Dell is going anywhere.
      • shrug

        At my work, about one out of every ten PCs is a Mac.... We mirror the general population. But everyone is different, so no one's personal anecdotes are really relevant anyways.
        • I tend to work in many differnt companies.

          All large aerospace. From Boeing to Lockheed to Honeywell all I see are Dells. Have for years.
  • In 1984...

    Apple portrayed I.B.M. as the Big Brother they were about to slay. Kinda funny don't ya think!