Will Apple's Mac sales survive the PC price war?

By Jonny Evans

The iPad invasion has devoured the netbook business and driven the PC industry into the ground, so expect a price war this Christmas as PC manufacturers, led by Acer [ACER INC] and Lenovo [LNVGY], struggle to woo new customers with a PC price war. But, with a reputation as a top-tier computer maker which does not compete on price, can Apple's [AAPL] Mac sales survive the onslaught of the PC price cuts?


[ABOVE: Most recent NPD predictions speculate Apple will achieve a record 4.5 million Mac sales in the current quarter, as shown in this otherwise based on real numbers graph.]

The oldest trade

In truth, this is a game Apple's been fighting a long, long, long, long time. Apple's Macs have never been the cheapest on the market, and even that short-term commitment to a sub-$500 Mac with the Mac mini and (earlier) the education-only eMac did little to dissuade PC purchasers that the company's kit is pricier than most.

There's numerous instances when chatting with others they have told me they purchased whatever Sony, HP, Acer or other alternative they are essentially unhappy with because "they couldn't afford a Mac."

Of course, there's always the argument you get more with an Apple purchase: from the OS to the included apps to the build quality and more, the company's creations are popular because they're actually quite good. Ask anyone who they'd like to run their Windows crackz on, and it may well be a Mac. Which is why Apple introduced Boot Camp, of course.

Some may disagree; some slate Apple as being over-priced, controlling, buggy software, over-hyped, etc., etc. Perhaps they are right, perhaps they are not: either way it has done nothing to damage Mac sales, which have for years consistently grown at a rate far in advance of the PC industry growth curve.


Happening, or hubris?

Apple is expected to sell as many as 4.5 million Macs in its current quarter, and while this isn't enough (unless you add iPad sales) to drive the firm to the number one slot, it's none too shabby a record for a company criticized for selling "over-priced kit".

Perhaps consumers actually want quality products which are packed with features inside well-designed boxes. Perhaps there's a market for Apple's design sensibilities. Perhaps that's why Apple is the most valuable technology company in the world.

But now we face deep economic gloom, job losses and (in the UK at least) steadily rising inflation during an age of grim socio-economic uncertainty on a global scale.

With this as the environment which PC vendors of all stripes must work within, perhaps a price war is the only way in which competitors can shore up their market share.

Infinite Loop beats downward spiral?

I'm not certain this is the case.

The need to move a dozen boxes where Apple need shift just one; the need to deliver technical support to those dozen boxes and the need to compete against other manufacturers also offering similar products at similar prices makes this a zero sum game. There's no winners in this fight, because there's no money to be made, or if there is, it's not enough.

This is the obverse image to the tablet wars. There, HP, RIM, and others have all found Apple's iPad juggernaut hard to beat, inciting fire sales of unsold tablet competitors. And this means (once again) that iPad killers are selling their products at less than the cost of manufacture.

In the smartphone business too, you see competitors using the same basic OS and offering products at the same essential prices with pretty much identical features. What does this mean? Another deeply competitive price war. What does that cause? Yet more attrition. This is not pretty.

Watch the footfall at Apple retail

Now there's a PC price war to come. This means at Christmas, consumers will be able to pick and choose between all manner of well-featured PCs, some of which will deliver the kind of looks and styling you might expect from a Mac. With little money around, many consumers (though not often Mac users) will bag a bargain.

Will this move to cheaper PCs knock Apple off its remarkable record of above average industry growth for the first time in years?

Certainly Apple management will be considering some tactical moves to underpin Mac sales. Perhaps one such move will be the introduction of iCloud services, complete with iMessage support within iChat. Perhaps that move could involve the introduction of a smaller, cheaper iPhone that works just brilliantly with a Mac. Perhaps such a move will involve introduction of new model Macs for the Christmas market....Apple has options, after all.

Meanwhile the company's competitors will be looking to the Christmas quarter for just one sign of a chink in the AAPL armor, just a few percentile point slip in its growth. Because that's how desperate the PC industry in the post-PC era has become. In PCs, as in smartphones, the scent of consolidation is becoming more luminous by the day.

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