Apple’s recent acknowledgment it is planning a design reset on its Mac Pro desktop was a much needed shot in the arm for longtime Apple loyalists. Make no mistake, the company’s decision to go back to the drawing board on its professional desktop has less to do with the bottom line and more to do with pleasing its base, full stop. That said, there is still real money to be made in the desktop market, especially at the high end. Moreover, there are some interesting personal computing developments happening in this space. Which leads me to wonder: Is Apple’s yet-to-be-revealed Mac Pro rethink going to be ambitious enough?
World Wide Desktop Market Numbers
It’s widely understood the PC market has been in long-term decline. The combined desktop plus notebook PC market peaked in 2011 when the industry shipped 331 million units worldwide. However, desktop shipments started to decline years earlier, peaking in 2007 at 161.1 million units (versus 105.3 million notebooks). By 2016, the total PC market had slipped to 246.6 million units, with desktops at 100.7 million. While those numbers may seem bleak, the reality is the world has come to the realization it still needs PCs and the market is stabilizing (as noted in IDC’s preliminary estimates for the first quarter of 2017). IDC has forecasted very modest growth for notebooks in 2017 and beyond, while desktop contraction will slow to low single digits over the course of the next two years.
Declining shipments don’t tell the whole story, though. As the market has contracted, the biggest market players have moved aggressively to grab more share. Lenovo, Dell, and HP have been particularly vocal about this and for many, many quarters, Apple’s Tim Cook announced during the company’s quarterly earnings calls that Apple’s Mac shipments were growing while the industry declined overall. Since the market’s peak in 2011, market share consolidation has been swift. In that year, the top five vendors accounted for 49% of total shipments. By 2016, the top five—Lenovo, HP, Dell, ASUS, and Apple—accounted for 72.4% of total shipments. The shift has been less drastic in desktops, where smaller players can still compete, to some degree. Still, in 2011 the top five vendors accounted for 46.3% of shipments and, by 2016, the top five—Lenovo, HP Inc, Dell, Acer, and Apple—made up 59.1% of shipments.
In 2016, Apple shipped about 3.3 million desktops worldwide, for a 3.3% share and fifth place in terms of total shipments (Lenovo was number one with 19.4 million units). However, as is often the case, Apple’s average selling price was notably higher than anyone else in the market. Apple’s ASP was $1,384, versus $505 for Lenovo, $554 for HP Inc, $557 for Dell, and $440 for Acer. All told, Apple’s desktop business generated revenues of $4.5 billion dollars. That’s roughly 9% of the entire desktop market’s revenues on 3.3% of shipments. Small versus iPhone revenues but a serious business nonetheless.
Forward-Looking Designs
So we’ve established Apple is embarking on a re-do of the Mac Pro primarily to appease its most loyal customers, not for the money. But that the money is pretty good, too. I’d argue there is at least one more reason Apple needs to focus its attention on the desktop. It’s an area where the company risks falling behind: Design Cachet.
Back in 2014, I was at the event when Apple launched the first Retina 5K iMac. It was gorgeous, expensive, and total overkill for my needs. But I wanted it just the same. At a time when the industry was shipping 5K monitors for $2,500 (despite a dearth of PCs fully capable of supporting them), Apple jumped the line by integrating the necessary technology to power that many pixels right in the box. The intention was never to sell tens of millions of them but to make a clear statement about Apple’s ability to create a desktop people aspired to own. The starting price was $2,499, shipping into a market where the average selling price of a tower desktop was $446 and the average price of an all-in-one PC was $890.
One of the tidbits of information to come out of Apple’s press meeting on the Mac Pro was the company isn’t looking at touch technology for the Mac because it says its clients aren’t asking for it. But I have to wonder how many of Apple’s pro customers were asking for a 5K iMac back in 2014 (or how many were asking for a TouchBar in 2016). Just as important, I would argue that, by refusing to explore touch on the desktop, Apple is automatically ceding the space to competitors such as Dell, which recently announced its long-gestating Smart Desk, and Microsoft, which is now shipping its Surface Studio (starting price: $2,999). Neither of these products will ship in large volumes but I suspect a small but vocal group of professionals will find them indispensable, while the rest of us will find them aspirational. And neither support touch as a mere technical gimmick but instead to enable new usage models. I get that nobody wants to reach up and tap a vertical desktop screen with their finger. But there are plenty of interesting things you can do with a finger, a pen, or a dial on a screen that shifts to the horizontal plane.
Apple obviously takes design very seriously. So seriously, in fact, it refuses to rush the new design of its next Mac Pro. The company doesn’t expect to ship the new Mac Pro this year (although it will ship updated versions of the existing Mac Pro as well as more pro-focused iMacs). Such attention to detail is part of what draws so many Mac fans to the brand but it also makes it very hard for the company to respond quickly to shifts in the market. If Apple really does expect one or more of its Mac products to be vital pro-level tools well into the future, the company must consider what future pro desktop owners will need before they know they need it. As such, I can’t help but think that they shouldn’t disqualify touch from the desktop equation entirely.
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