The Mac is poised to break Apple's annual sales record, according to an analysis of past sales trends as well as Wall Street projections.
The increase is a strong signal that Apple does have an opportunity to grow not just short-term sales, but to capture a larger share of the overall personal computer market, industry analysts said.
"My opinion hasn't changed, there's a lot of share to be gained by the Mac," said Ben Bajarin of Creative Strategies today. "As consumers get back into the game, you can make the case that while tablets were great, I need this particular product [a device with a keyboard]. In that core group, the Mac has a strong value proposition."
Last year, Bajarin proposed that the Mac, which in 2013 accounted for just 5.6% of all personal computer sales, had a shot at reaching 20%.
While the Mac remains far from that target, it has been on an upswing. The line broke Apple sales records for both quarters this calendar year, up 5% year-over-year in the March quarter and up 17% in the June period.
That streak could continue.
Over the last three years, Mac sales in the July-September quarter have jumped an average of 22.8% from the previous three-month period -- sales fueled by back-to-school purchases. The quarter-over-quarter growth has also been exaggerated by less-than-stellar numbers in the June quarter, historically the slowest or second-slowest of the year.
Boosting the 4.4 million Macs Apple reported for the June quarter by 22.8% would produce a forecast of 5.4 million for the September quarter, a record by 500,000 machines. Building on that, and using the same methodology -- over the years sales have climbed an average of 6.1% from Q3 to Q4 -- the December quarter could be more than 5.7 million. The December period would also be a record, trumping the milestone of Q4 2011 by 550,000.
Under this scenario, Apple would sell 19.7 million Macs worldwide for the year, breaking the 2011 record of 17.8 million by, for Apple, a huge margin of about 2 million.
That would represent double-digit year-over-year growth of 15.1%, something Apple hasn't experienced since 2011, the year of "Peak PC." It would also thrash the industry average as projected by research firms IDC and Gartner. IDC, for example, has forecast a 6% decline in the global personal computer business compared to 2013; Gartner, which measures a different mix of devices, has estimated the downturn at 3%.
But double-digit Mac sales growth isn't a certainty: Wall Street forecasts for the second half of 2014 were more conservative, or more realistic, depending on one's perspective.
Brian White of Cantor Fitzgerald has pegged Q3 and Q4 Mac sales at 4.9 million and 5.1 million, respectively, representing sequential growth of 10% and 4%. For 2014, White's estimate of 18.5 million translated into an annual gain of 8.3%.
Meanwhile, Brian Marshall, an analyst with the ISI Group, was more optimistic for the holiday selling season, with Q3 and Q4 forecasts of 4.8 million and 5.5 million, or quarter-over-quarter increases of 10% and 14%. His annual total of 18.9 million was 10.5% higher than actual sales in 2013.
Even though their numbers didn't agree -- and were significantly below those Computerworld came up with its "average quarter-over-quarter gains" approach -- each analyst's projection would mean new yearly records for the Mac.
Because those estimates anticipate Mac growth in the face of a still-down market overall, Apple should increase its share of systems shipped during 2014. Using IDC's forecast of 296.3 million personal computers to be shipped worldwide this year, Apple's slice would be between 6.2% and 6.6%, or as much as a full percentage point above 2013's.
Even so, the highest 2014 share estimate of 6.6% makes the Mac no more than a small fish in a big sea. But as other analysts have pointed out, Apple rakes in most of the profits recorded by personal computer makers. With a larger market share, the trend, and Apple's revenue and profit, would climb too.
In 2013, Apple booked $21.5 billion in Mac revenue and operating income of $5.9 billion; this year's sales estimates would generate between $23.2 billion and $24.7 billion, with operating income between $6.4 billion and $6.8 billion.
Most experts have attributed the first-half-2014 Mac sales bump to lower prices, particularly the 7%-10% cuts of April to the popular MacBook Air, the third reduction in 26 months.
"A hundred dollars here and there, sooner or later you're talking about real money," said Ezra Gottheil of Technology Business Research about the typical Apple price cuts.
Since Apple began cutting prices of the MacBook Air in June 2012, it's reduced prices between 8% and 25%, depending on the model. The more-popular 13-in. notebook has seen the biggest cuts, between 23% and 25%, while the lower-priced 11-in. has been discounted by no more than 10%.
Bajarin attributed some of the Mac's stronger sales to the lower prices, calling them "helpful." But he also argued, as he has before, that there are other factors in play.
As consumers -- the Mac's true audience -- consider upgrading some but not all of their older machines, the higher-priced Mac starts to look more attractive and even more economical. (Not every family member needs his or her own computer because each is already armed with a smartphone or tablet, or both.)
"They're willing to make an investment in a computer that will last a long time," Bajarin said, referring to the Mac.
"I remain convinced that, particularly with the changes in the landscape, the muted and confused response to Windows 8, that consumers are really looking at everything," said Bajarin. "There are a couple hundred million PCs that are four, five years old, and those owners are going to look around as they consider replacing them."
The increased sales of Macs in the first half of 2014 -- 8.55 million or 6% more than the previous Q1-Q2 record -- hints that Bajarin's thesis is already playing out, and perhaps getting a jump on Windows PCs. Many experts expect the rebound to continue as consumers reenter the market in the second half of the year.
Personal computer shipments, according to research firms IDC and Gartner, have stabilized or slowed their free-fall in 2014's first half, in part because companies are continuing to replace ancient Windows XP systems after that OS reached retirement in April. Those replacements will probably end this year, however; IDC and Gartner have predicted that consumers will then take up the slack.
Both Bajarin and Gottheil were bullish on the Mac for the remainder of the year. "I think that edging prices lower will continue to happen," said Gottheil of Apple's strategy. But that's happening across the industry. "In the Windows PC world, there's a lot of moves toward lower prices," he added. "The ASP [average selling price] curve is lowering at both the high and the low ends."
Neither analyst expects Apple to suddenly abandon its practice of playing in the premium-priced segment in an effort to grab market share. But each saw not only evidence of impending moves to juice sales, but ways Apple could, perhaps, reach Bajarin's seemingly-fantastic goal of a 20% share.
"I can see Tim Cook, who is a somewhat more flexible manager [than former-CEO Steve Jobs] saying, 'Build me a MacBook Air using something other than an Intel Core processor, let's see how it works,'" said Gottheil. "If it can provide the full Apple experience, why not sell it?"
Apple would have a chance to lower prices in its more traditional fashion -- and thus increase its share -- said Bajarin, if, when it eventually releases a Retina-quality-display-equipped MacBook Air, it retains the current models at lower prices.
"Apple's not going to ever be a low-cost leader, but the Mac could bleed into the $799 range -- with the 13-in. MacBook Air, not the just the 11-in.," said Bajarin. "At that price, it could really start to squeeze the traditional sweet spot of Windows notebooks, which is in the $550 to $599 range."
That move would be reminiscent of what Apple has done in the iPad line, where when it launches new models, it keeps selling an older model after cutting the price $100. When Apple debuted the iPad Mini with Retina last year, for instance, it lowered the price of the original non-Retina Mini by $100 to $299.
But holding the price line of a Retina MacBook Air -- and thus creating an umbrella under which the non-Retina Air could be placed -- would be contrary to how Apple handled the MacBook Pro's transition to a higher-resolution display. In 2012, when it launched the first Retina MacBook Pro, Apple simply inserted a new model -- a 15-in. MacBook Pro with Retina -- into the line at a price $400 higher than the lowest-priced 15-in. stock model. The existing laptops' prices did not change.
"I see Apple as sitting on the cusp [of that decision], with some types of products that do start to tip into the lower price range," said Bajarin. "I think they'll continue to be aggressive, and continue to make the Mac's case. But the thing to understand is that Apple is in control of [its] own destiny."
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