Apple (AAPL)'s Mac premium has been dominating the PC market for quite some time. The device encompasses superior quality, innovation and improved value which ensures a good customer base for the product. Apple has shown that it is resisting the declining PC market while capturing market share by showing continuous growth of its PC sales. Fiscal 2014 quarter one posted a 19% year-over-year increase in Mac sales and last quarter posted a 5% increase. With Mac pulling in $5.5 billion in revenue for the quarter, it only made up about 11% of total revenue.
Performance of Mac
Apple has lowered the prices of the MacBook and has even improvised on the looks. This makes the sleek laptop ever more attractive. In 2013, the MacBook Pro saw a price drop in February from $1700 to $1500 and then in October from $1500 to the current $1300. These decreases led Apple to a year-over-year 5% increase in units sold for the quarter. Revenue wise, there was only an increase of 1.3% due to the reductions lowering the average cost of each unit by around $44.
- Warning! GuruFocus has detected 4 Warning Signs with AAPL. Click here to check it out.
- AAPL 15-Year Financial Data
- The intrinsic value of AAPL
- Peter Lynch Chart of AAPL
If this wasn’t enough, Apple has recently slashed the prices of its 11 and 13-inch MacBook Air to $899 and $999 while embedding improved processors inside. Not only does this put the 11-inch version at half the cost of the prestigious launch version of Air in 2008, but also serves as an entry into an enormous market which consists of the $500 to $1000 range of mobile PC which in 2013 accounted for nearly 100m units making up nearly 55% of market. With an additional price drops on the Air, it is very likely that the momentum of its improving market share will improve at a potentially increased rate.
Growing Demands for iPhones
In the last six months, two-thirds of newly registered iPads and half of newly registered iPhones came from first-time users. This growing demand for iPhones and iPads has been coming mainly from first time users. Things have been so good for the tech-giant (or at least for this segment) that the last quarter has been noted as its best non-holiday quarter for the device. This opens a whole new market in front of the company as the Mac has caught the fantasy of many a Windows loyalist. This new customer base if capitalized by the company will give a momentum to drive growth and will become increasingly difficult to break.
Mac has increasingly been becoming a smart choice for smart people. It comes at a time when people are trying to ease themselves out of the specs and performance clutter. The primary factors holding Windows together are its affordability and a strong presence in market that comes from its massive size. However, if we put these factors aside we may find more and more Macs being sold each quarter to rev up more and more revenues for Apple. With the current overall performance of the company the AAPL stock is definitely a buy.