Macs contribute record-low 13% to Apple's revenue

The Mac's contribution to Apple's bottom line fell to an all-time low in Q1

The Mac's contribution to Apple's bottom line fell to an all-time low last quarter, according to data from the company.

Once upon a time, the Mac line accounted for as much as half of Apple's income. But in the first quarter, computer sales were just 13% of the company's near-record revenue.

The downturn has been dramatic, sparked first by the introduction in mid-2007 of the iPhone, then accelerated again in early 2010 when Apple launched the iPad.

In the second quarter of 2007, the first time the iPhone showed up on Apple's balance sheet, Macs drove 47% of the revenue, adding $2.5 billion to the bottom line. That number fluctuated for nearly three years -- a low of 37% in the fourth quarter of 2007, a high of 50% in the third quarter of the same year -- but generally stayed in the 40s.

It wasn't until the fourth quarter of 2009 that the Mac's contribution fell under 30%. In that three-month period, Macs accounted for just 28% of Apple's $15.7 billion in revenue, while the iPhone climbed to 36%

But when the iPad appeared in Apple's ledgers in the second quarter of 2010, the Mac's importance to the company's total revenue fell even more, slipping to 20% by the end of 2010, then to 18% and 14% in two of the 2011 reporting periods.

So even though the Mac brought in $5.1 billion last quarter -- more than double the $2.5 billion in the second quarter of 2007, its share had dropped precipitously.

Does that mean the Mac is meaningless to Apple?

Ezra Gottheil, an analyst with Technology Business Research, gave an emphatic "no" to the question.

"Is this a viable business? Yes it is. Is it as profitable as other products? Certainly not," said Gottheil.

Apple has interests that demand the continuation of the Mac line, even though it's not delivering as big a chunk of sales, said Gottheil, ticking off several reasons why Apple will not abandon its original business.

"They're more than willing to keep the Mac going," he argued. "It's strategically important -- they want a certain amount of cross-fertilization between OS X and iOS -- and it's a development platform that lends itself better than others to its other devices. People who develop iOS apps mostly use Macs."

Among other things, Gottheil said, the Mac allows Apple to stock its retail stores with more than just mobile devices and offers the ability to turn iOS customers into Mac owners. That's an important factor, the analyst said, in the Mac's bigger unit numbers than several years ago.

Apple's executives regularly tout new customers for the Mac that have been drawn in by the retail stores or the firm's mobile lines. Yesterday was no exception.

"About half the Macs sold in our stores during the March quarter were to customers who had never owned a Mac before," Chief Financial Officer Peter Oppenheimer said Tuesday during Apple's first-quarter earnings call.

More than 820,000 Macs were purchased in Apple's retail outlets last quarter, Oppenheimer said, putting the new-to-Mac number at around 410,000.

"And there's a certain amount of evangelizing that they do with the Mac," said Gottheil. "They've always been a personal computing company dedicated to serving the users."

That, he stressed, paid dividends when Apple used the same philosophy to tackle smartphones, then tablets.

Gottheil also noted that the numbers could tell a different story than one of declining revenue share.

"The Mac is more than it was," Gottheil said, talking about the dollars the Mac brings in. "But it's the rest of the company that's grown even faster."

Apple hardware sales chart
The Mac's contribution to Apple's bottom line fell to an all-time low last quarter, according to Apple financial data.

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.

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