Three years ago I would have gotten a good laugh out of that headline, but it’s true (This in depth and interesting article details the market shift).
Apple has completely conquered the high-end computer market, while PC makers have been producing weak machines with lower profit margins.
PC manufacturers fell victim to one of the classic blunder, (“The most famous is never get involved in a land war in Asia” The Princess Bride) got themselves caught up in an unwinnable battle over price.
Back in March, Microsoft began running the “Laptop Hunters” ad campaign. I had a particularly negative response to the whole thing.
Here’s part of what I argued:
The second problem with this section of the ad is the price-point. Microsoft doesn’t sell PCs but their partners do. The profit margin on a $700 laptop isn’t usually amazing. They set Lauren’s budget at $1000, why not have her spend $950? or $990? The ad lowers the expectation for what consumers will expect to pay. If Lauren could get a “great” computer for $699.99 then that’s what a PC should cost.
This ad also degrades the value of a PC. Apple is now officially the gold-standard… Microsoft said so in its own ad. Microsoft has made Apple the BMW of computer makers (if they weren’t considered that already, there is no debate now). PCs are the computer you buy when times are rough… like now. But in the future, the economy won’t be in the dumps (hopefully sooner than later). Then people will have money again. When they replace the cheap POS of a PC they bought during the recession, they are going to want to replace it with something better. Something top of the line… and now we all know that PCs are the cheap computer.
I guess I learned something in those brand management and consumer behavior courses I took in grad school.
Couple Apple’s market share victory with Microsoft’s first annual sales decline, and you can imagine that a lot of folks in Redmond are having a pretty crappy week.
High-end computers are where the money is, and Microsoft (and PC makers) can’t possible afford to concede that turf to Apple… That’s like agreeing to split an apple with a friend and agreeing to eat the core; there isn’t much to eat, and the seeds contains trace amount of cyanide. They need to win back consumer confidence (good luck with that), and they need to do it fast (seriously, now is the time to throw money at the problem). If Microsoft doesn’t change their product’s image problem before the economy recovers, there will be a mass exodus from cheap PCs to the high-end Apples.
It’s become abundantly clear that if the average consumer is going spend a lot of money to buy a good computer, they prefer to purchase it from the fruit company.