Apple CEO defends Mac line; analysts foresee iPad hybrids

Sales down for second quarter in a row, but Apple can 'redefine' personal computer, experts argue

Apple CEO Tim Cook yesterday defended the company's iconic Mac line, which saw a second consecutive decline in sales last quarter, and promised that Apple would continue to crank out personal computers.

"I don't think this [personal computer] market is a dead market or a bad market by any means," said Cook during Tuesday's earnings call with Wall Street. "I think it has a lot of life to it. We are going to continue to innovate in it."

Apple sold 3.95 million Macs in the quarter ending March 30, down 2% from the same period the year before. The sales decline was not nearly as steep as the fourth quarter of 2012, when numbers were off 22% -- largely due, claimed Apple, to iMac shortages -- and not as dramatic as the personal computer industry's 14% decline worldwide.

But it was the second consecutive quarter that Mac sales declined year-over-year -- a first for Apple since at least 2006, when Computerworld began tracking Apple's numbers -- and did not indicate that any pent-up demand for the iMac was enough to make up for the overall slump.

Mac sales have been affected by many of the same factors that experts have cited to explain the poor performance of the PC industry, including longer stretches between computer purchases by consumers, a saturation in developed countries like the U.S. and -- most importantly -- a shift in dollars from computers, including Macs, to tablets and smartphones.

Even so, Cook stuck up for the Mac and gave no hint that Apple would abandon the market. "We're going to continue making the best personal computers. Our strategy is not changing," he said. "We've got some more great stuff planned [and] so this is an area we're continuing to invest in."

The Mac's contribution to Apple's total revenue for the quarter was 12.5%, a two percentage point increase from the previous quarter, and in line with the same period last year.

Apple first deemphasized the Mac in January 2007 when it stripped the word "Computer" from its name to call itself simply "Apple Inc." The name change was triggered by Apple's introduction of the iPhone on the same day.

Analysts interpreted Cook's defense of the Mac as a signal that, while sales have stalled, Apple plans to adapt its personal computer line as the PC market mutates.

"The personal computer market is not dead," asserted Patrick Moorhead, principal analyst with Moor Insights & Strategy. "Apple can redefine the market by creating a device in between the iPad and the MacBook Air."

For Moorhead, Apple has an opportunity to jump on the hybrid or convertible market -- defined as devices that share traits of both tablets and traditional notebooks, and typically sport detachable keyboards -- that Microsoft and its partners have tentatively entered with hardware like the former's Surface Pro and Dell's XPS 12.

"Apple can drive the heck out of the iPad, especially the [9.7-in.] model, but I believe in their future there's a hybrid device. There's lots of room, especially in the enterprise, for a $699 'convertible' iPad."

Moorhead envisioned such a move, if Apple makes it, in 2014.

Carolina Milanesi of Gartner had different thoughts, triggered by an apparent tilt in the mix of iPads sold last quarter toward the less-expensive iPad Mini. How Apple positions the next iteration of the iPad Mini, and whether it keeps the current model in its inventory, will hint at Apple's personal computer strategy, Milanesi said.

Apple product share of revenue
Mac unit sales were down 2% in the first quarter, the second consecutive decline. But CEO Tim Cook refused to abandon personal computers. (Data: Apple.)
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