Bring Back Apple's Mac Vs. PC Ads Since Windows XP Isn't Supported

Apr 14 2014, 10:18am CDT | by

Bring Back Apple's Mac Vs. PC Ads Since Windows XP Isn't Supported
Photo Credit: Forbes Apple

Microsoft officially ended support for Windows XP last Tuesday, April 8, over 12 years since it was first sold in October 2001. Even though this has been well known, by at least businesses, almost 30% of the worldwide installed PC operating systems are Windows XP. This could provide an opportunity for Apple to increase its Mac sales as some users look to buy new systems vs. upgrading the software. (Note that my family and I own Apple shares).

Windows XP should become more vulnerable to viruses and other hacks

Last week Microsoft officially stopped supporting Windows XP. While there probably won’t be a rush to migrate or change systems since this should have already happened (but hasn’t so it highlights the slow pace of change) there could be an opportunity for Apple to increase its share of the PC market.

Source: Net Market Share via Ars Technica

Gartner and IDC had Apple’s U.S. share of the 2013 PC market at 12.6% and 10.3% , respectively, and both have the company’s worldwide share at 5.4%. Gartner and IDC have U.S. total PC shipments at 60.7 and 63.5 million, respectively, and both have worldwide PC shipments at 316 million for the year (17.1 million Macs). HP and Dell each have about 25% of the U.S. PC market (and therefore the most vulnerable to Macs gaining share) while on a worldwide basis Lenovo and HP are the two leading vendors with about 17% share for each of them.

Every 1% increase of worldwide market share generates about $0.88 in EPS

It is an interesting analysis to determine how much revenue and earnings Apple could generate by increasing its U.S. and worldwide market shares as users evaluate what systems to buy. Gartner and IDC estimate that there were just over 60 million U.S. PCs shipped in 2013. To calculate the impact of a 1% share increase for Apple assume:

  • Each 1% share increase is equal to 600,000 Macs
  • Each Mac sells for $1,315 or what one sold for in fiscal 2013
  • This would generate Mac revenue of $789 million (3.7% more than fiscal 2013’s)
  • Assume 25% gross margins for Macs
  • After applying a 26.2% tax rate and 874 million shares every 1% U.S. market share generates
  • $0.17 in EPS vs. $39.76 in fiscal 2013 

Both Gartner and IDC estimate that there were 316 million PCs shipped worldwide in 2013. When you assume the same selling price and other metrics as above Apple could generate over $4 billion in additional revenue (19% more Mac revenue than fiscal 2013’s) and $0.88 in EPS.

The above examples are for “only” 1%. I put “only” in quotes since PCs are a very competitive market and in the segments that Apple plays in (premium priced systems, especially laptops) limits its ability to increase total share so gaining even a 1% increase won’t be easy to pull off even when users may be looking for a new system.

Bring back Mac vs. PC ads

I believe this would be the perfect time to bring back some Mac vs. PC commercials to highlight Macs security especially since the Heartbleed security flaw was announced last week. Apple told Re/code iOS and OS X never incorporated the vulnerable software so its systems were not affected.

I have added a link to some of the company’s Mac vs. PC ads which are quite well done.

Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.

 
 

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