Byte of the Apple

Mac's Future: Death Rumors Greatly Exaggerated


Don't be fooled by the hoopla over the iPad. While Apple (AAPL) has dropped the word "computer" from its name and is swiftly using the iPad to build a market for tablets, the company isn't about to let the Macintosh languish.

I understand the temptation to think that the Mac's importance may be receding. In the first few months after I purchased my MacBook Pro last year, I rarely looked up from it. More recently, I'm using the iPad for many tasks I'd normally entrust to the Mac—among them, downloading music and TV shows from iTunes and catching up on e-mail and news headlines.

Consider as well Steve Jobs's June 7 address at Apple's Worldwide Developers Conference. Jobs didn't mention the Mac once. That followed the disappearance of Apple's brilliant "I'm a Mac" TV ads from its website and the appearance of remarks in April from Justin Long, the actor who played the always cool-and-collected Mac, who said the campaign "might be done."

Apple earnings likewise show additional products coming to the fore. In the first half of fiscal 2010, the iPhone accounted for 38 percent of sales, vs. 28 percent for the Mac. In fiscal 2009, the iPhone made up only 30 percent of sales, compared with the Mac's 32 percent. "It's a totally different company than it used to be," says Gene Munster, an analyst at Piper Jaffray & Co. "It's not a traditional computer company. It's a mobile devices company." In 2011 the Mac will make up only 27 percent of Apple's $69 billion in sales, Munster estimates.

Still, the Mac has great potential for growth. In 2005, market research firm IDC pegged Apple's share of the U.S. PC market at 4 percent. In the first quarter of this year, it was 6.4 percent. That may not sound like much progress, but for every half-percentage point of market share that Apple takes away from PC vendors such as Dell (DELL) and Hewlett-Packard (HPQ), Munster estimates that Apple boosts its sales by about $3 billion.

embedded projectors and multitouch?

What's more, market share numbers are a poor reflection of unit sales, which have grown substantially. In fiscal 2004, Apple sold 3.29 million Macs. It sold 3.36 million in the first quarter of 2010 alone.

There's also plenty of room for innovation on the Mac front, as evidenced by Apple's patent filings, many of which have been summarized by Jack Purcher, producer of the Patently Apple blog. Judging from the documents, future Macs may boast such features as embedded projectors that turn any nearby wall into a display for Keynote decks or the latest movie downloaded from iTunes. Apple has yet to adapt the innovative touch technology found on the iPhone and iPad to the Mac; multitouch technologies have been used in the touch pad on the MacBook Pro and in the Magic Mouse, but not on any Mac displays.

Another Apple patent filing suggests that touch controls for certain functions will be brought to the surface of the MacBook's aluminum body, with virtual buttons that disappear from view until they're needed. A recent application describes a Mac that can sense when its user is in close proximity and wake from a sleep state without requiring a wiggle of a mouse or the pounding of the space bar. This might be especially useful for controlling power consumption.

Apple's newer products may also lure customers to consider buying a Mac, much the way consumers of the iPod did early on, says Charles Wolf, an analyst at Needham & Co. in New York. "It's a symbiotic interplay," he says. "Once you get an iPhone or an iPad, you get exposed to the entire Apple gestalt in the Apple retail stores." The iPhone's "halo effect," he said, may prove even stronger.

Arik_hesseldahl
Hesseldahl is a reporter for BusinessWeek.com
With Carlos Bergfeld in Silicon Valley

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