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Apple's iMac on the road to irrelevance

The computer that saved company's bacon in '98 peaked a year ago

By Gregg Keizer, Computerworld
December 10, 2012 07:45 AM ET

Page 2 of 2

Charting White's and Marshall's estimates show that after the fourth-quarter 2011 peak of 1.5 million, Apple's desktop line-up will essentially flatten at an average of under one million per quarter for the next two years.

Meanwhile, Apple notebook sales are forecast to increase by 11% this quarter, and post double-digit gains in 2013 and 2014. In other words, sans MacBooks, Apple would essentially be out of the computer business.

Analysts' estimates show that Mac desktop sales will flatten in the next two years. (Data: Apple, Topeka Capital Markets, ISI.)

Mac sales have been hammered by some of the same blows that have landed on the much larger Windows PC industry, including tough economic times for consumers and a shift toward tablets. Even Apple has been affected by what its executives like to call the "post-PC world."

Example One: It's likely that the iPad Mini, Apple's diminutive tablet that went on sale five weeks ago, will sell more units this quarter than all Macs combined.

Example Two: The Mac has been the weak sister of Apple revenue since the fourth quarter of 2009, when the iPhone passed it by. In 2012's third quarter, the most recently-reported by Apple, the Mac accounted for just 18% of all company sales, behind both the iPhone (with 48%) and the iPad (21%). By the end of fiscal year 2013, the Mac's share will have dropped to 14%, White estimates, as the iPhone again hits 50% and the iPad climbs to 25%.

With so little impact on the ledger book, it's no surprise that Apple didn't come through this fall with one item on many wish lists: a high-resolution, "Retina" screen. That addition would probably have pushed up iMac prices even more than the extra $100 Apple slapped on the new machines.

But Apple seems determined to keep desktops in its portfolio. The new iMacs featured the company's first deployment of "Fusion Drive," an option that combines flash storage with a standard hard drive to boost startup, application launches and file copying chores. And the company redesigned the case to make it thinner, a move that left the smaller 21.5.-in. iMac practically impossible to upgrade after purchase.

Analysts have maintained that desktops, Apple's included, still have a market, primarily as the shared computer in homes where each family member has a more mobile device, like a notebook or tablet.

Windows PC sales bear that out. According to the NPD Group, between 20% and 30% of early Windows 8 systems have been of all-in-one machines, many of them very similar in appearance to the iMac.

Steven Baker, of NPD, noted that in the Windows market, "desktops have done better all year" in terms of sales gains, or if they've slipped, they've done so by lower margins than PC notebooks.

Baker was optimistic about Windows desktops' chances, in part because OEMs are starting to equip them with touch-sensitive screens, something Apple has refused to do on any of its Macs. "All-in-one [desktops] make great touch devices," Baker argued in an interview two weeks ago.

That's not what Apple's former CEO, Steve Jobs, thought. In October 2010, Jobs dismissed touch on desktops.

"Touch surfaces don't want to be vertical," Jobs said then. "It gives great demo but after a short period of time, you start to fatigue and after an extended period of time, your arm wants to fall off. It doesn't work.... It's ergonomically terrible."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Read more about macintosh in Computerworld's Macintosh Topic Center.

Originally published on www.computerworld.com. Click here to read the original story.

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