Apple dominating the $1,000+ PC market because, well, it doesn’t really offer a cheaper one

May 19, 2008 | MG Siegler | Comments | |

Automobile pioneer Henry Ford once famously said: “Any customer can have a car painted any color that he wants so long as it is black.”

A variation of that statement can be applied in our time with Apple computers. You can get a desirable Apple computer, but you’re going to be paying over $1,000 for it. Not surprisingly, Apple is dominating that particular market in U.S. consumer sales.

Some new data out from the NPD group is pretty staggering. In the first quarter of 2008 Apple controlled 66 percent of the U.S. retail share of the $1,000+ PC market. Specifically it controlled 70 percent of the desktop market and 64 percent of the notebook market at that same $1,000+ level.

This 66 percent number stands in stark contrast to its 14 percent retail share for the entire U.S. PC market. Why is this? It’s simple. Apple really doesn’t sell much of a computer for under $1,000.

Now I know what everyone is about the scream in the comments: “You’re forgetting the Mac Mini!” I know about the Mac Mini, but lets be honest — how many of us really take the Mac Mini seriously? Everyone I know that has one uses it to either hook up to their home entertainment center or as a testing machine. That hardly fits with most of the other sub-$1,000 PCs out there.

It doesn’t come with a monitor, nor does it come with a keyboard or mouse. A friend asked me today if I would recommend a Mac Mini or an iMac for his parents who want to buy their first Mac. It’s a no brainer. After buying a monitor and the other accessories that come with the iMac, the price difference is only going to be a couple hundred dollars at most. Opt a machine (the iMac) that will be much faster and offer a better experience.

I would contend that Apple doesn’t even takes the Mac Mini seriously. Apple hasn’t significantly changed the machine since its launch in January of 2005 — yes, over three years ago. Because of this there are constant rumors of its demise. Frankly, I’m still not convinced that Apple shouldn’t just merge the Mac Mini with the Apple TV and create a truly great living room media center.

If Apple was serious about being in the sub-$1,000 computer market, it would bring back its 17-inch iMac and sell it for $799 or launch a slightly downgraded MacBook for $899. It could do both very easily, and I have no doubt that both would dominate their markets just as much as Apple’s other machines do. I’ve questioned why Apple simply doesn’t do this in the past. That answer seems to be simple as well — it doesn’t want to.

That could be about protecting the brand or maintaining the feeling of exclusivity. Or it could be that the $1,000+ PC market is just more profitable. Still, these numbers make it pretty clear that Apple is winning at least part of the market share war — and making a ton of money — its own way.

[photo: flickr/Horrotaxi]

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About the Author, MG Siegler

MG Siegler writes about technology trends and new media for VentureBeat, with a focus on mobile topics, social elements and key news stories. Before that, MG wrote about technology on his blog, ParisLemon. Originally from Ohio, MG attended the University of Michigan where he studied film. He's previously lived in Los Angeles where he worked in Hollywood and in San Diego where he did web development. He now lives in San Francisco.

  • Falkirk
    Your logic is, to be kind, flawed. To be unkind, it sucks.

    You state that Apple dominates the $1,000+ computer market because they only sell computers for more than a thousand dollars. Microsoft only offers one Zune model at the high end of the portable player market so naturally they dominate...oh wait?

    Just because Apple only sells computers for more than a thousand dollars does not in ANY WAY explain why they currently sell 66% of the computers in that market. It DOES explain why Apple sells a disproportionate number of it's own computers in that segment of the market.

    Next time, please try to use a causal relationship when constructing a logical argument.
  • You're reading it the wrong way Falkirk. I'm suggesting the only reason Apple isn't dominating the entire U.S. consumer market in the same way is because it doesn't offer a viable solution for less than $1,000. I'm not saying that is why it dominates the $1,000+ market - it does that, in my opinion, because it offers the best computers at those price points.
  • Falkirk
    Please accept my apologies for misreading your post. I did, in fact, read it the way I responded. Perhaps I should focus more on my own reading comprehension than on critical analysis of others?

    Nah! What's the sport in that!

    Thank you for your gracious reply.
  • No worries, I certainly see how you could read it the other way. Glad we're on the same page now.
  • ice
    I was a little surprised at reading those numbers. If its true then its pretty phenomenal. I think you are correct in everything you've written.

    My comments-
    1. I agree that Mac mini should be merged with the apple tv. If you could (without hacking) watch streaming content on the appleTV, that would be super awesome. Movie studios will make this an excuse and run away from the iTunes store, if this were to happen.
    I am a appleTV fan regardless. People complain about apple TV only supporting 720p HD, yet no one seems to mind that the netflix box is not HD at all. For me non HD content is ok to view, but horrible to hear (non 5.1 sound).

    2. There is no money in the cheap PC market. And its over crowded. Your company ends up in China, if you go down that route. They are better off exploring newer markets (iphone, tablet, car navigations etc) than try and build things cheap (not their forte).

    Good post
  • Thanks Ice, yes, the numbers are very impressive.