The PC market is difficult to understand at the moment. The combination of the holiday season and the advancing recession have collided with other trends; Apple’s growth in market share and the take-off of the netbook (or sub-notebook) market. Here are some market figures:

• Sales of Macs (i.e. desktops) in US stores declined last month (down 1% from a year ago) according to NPD Group
• PC sales rose 2% (NPD Group)

This is a single months figures. In October, Apple shipments grew 28% from a year earlier, while PCs grew at a mere 7%. But the psychology of recession had not taken hold in October, so those figures may be reflecting a whole different era.

Despite the fact that Steve Jobs doesn’t believe in netbooks, (he thinks it’s impossible to build anything but junk at netbook prices), there is clearly a big market for them, that has drawn HP, Dell, Toshiba and just about every PC vendor in. However, netbooks have wafer-thin margins of the kind that Apple could never live with.

Apple hasn’t cut its prices much beyond the special discounts it offered for a day or two just after Thanksgiving, while Dell and HP have been dropping prices by up to 50%. The average Windows PC price is down by about 35%. Thus the price disparity between Apple and everyone else is showing and having some impact. And in line with the tumbling economy, analyst firm IDC has lowered its 2009 PC growth forecast, from an estimated 4.5% growth to a 5.3% decline.

MacWorld Cometh

It is far too late to affect sales in the holiday season, and it’s likely that Apple will perform reasonably well overall, due to strong iPhone and iPod demand, irrespective of how poorly the consumer market behaves. Nevertheless there is speculation that Apple will introduce something into the “netbook space” at MacWorld in January.

To my mind, there are several possibilities

1. The mac mini may be updated, just to remind everyone that it’s possible to buy a low-cost Mac desktop.
2. Apple may produce a gaming device based on the iPhone software, but larger than the iPhone. This would probably also be a video player. Such a device would “qualify as a netbook of a kind” but would redefine the market to being “not exactly a cut down laptop.” It’s the kind of thing Apple does very well.
3. Apple might produce a tablet device, which was not exactly a tablet device.

In the case of either 2. or 3. (above), I’d look to Apple to feed applications to the device from its iPhone download site. It’s really unlikely that Apple will do an OS X netbook because it could canabalize its laptop sales (and its laptop sales have held up very well.)