A couple of years ago I wrote a posting entitled; Apple’s Market Share Is Bigger Than You Think. I doubt if Steve Ballmer, Microsoft’s CEO, read that piece, or if he did, he was in denial about its implications when he spoke to market analysts in July 2009. That’s when he equated Apple’s market share growth to being “a rounding error.”

Quantcast’s Figures

So I wonder what he makes of the recent market figures from web analytics firm Quantcast. These figures suggest that 10.9 percent of online users in North America are using Macs. This is an increase of 30% over the previous year. Quantcast provides a geographic breakdown, so we can see the global picture. Here it is.

• North America – 10.9% market share.
• Oceania – 8.6% market share. (Oceania includes Australia and New Zealand)
• Europe – 4.7% market share.
• Asia – 2.5% market share. (China 1.9%, India 1.2%)
• South America – negligible market share.
• Africa – negligible market share.

There’s something akin to a ripple effect going on here. The stone hits the water in North America and ripples out to the rest of the world. Apple’s market share roughly correlates to the distribution of Apple Stores in the associated geographical regions and probably also aligns with Apple’s advertising and marketing spend in those areas.

The question; “What is Apple’s share of the PC market and how fast is it growing?” is simple enough, but the answer is complex. It is obvious to anyone who reads the news that Apple is growing strongly in the PC market and has become a force to be reckoned with. But how much of a force?

Let’s examine Apple’s market share from as many dimensions as possible to get a clear picture. We’ll begin with the global perspective.

Market Share Realities

• Apple’s share of the Global PC Market is now just under 5%… (I)
• But if you disregard the business PC, which is a separate market (despite the tendency of IDC and Gartner to merge the two markets) then this figure can be raised. My Apple market share model suggests that only about 16% of Mac are bought by business. If you apply that ratio, then…
• Apple’s share of the Global Home PC Market = 5 x .84 x 1.5 = 6.3%…..(II)
• But if we focus on the US market where Apple has greatest impact and which leads all other markets in Apple adoption, we see that IDC and Gartner estimate Apple’s market share at 7.4% (final quarter 2009). If we apply the same multipliers we did before then…
• Apple’s share of the US Home PC Market = 7.4 x .84 x 1.5 = 9.3%…..(III)
• Notice that this figure is below the Quantcast figure measure of 10.9%. But that measures what percentage is actually using Apple Macs. It doesn’t measure who’s buying what, but who’s using what. If we assume that both these estimates are reasonably accurate, it simply indicates that Apple’s Macs don’t get cast aside as frequently as PCs (the propensity to use the product is higher).
• But, so far we have only used figures based upon market share by units sold or units used. Another reality is that average revenue that Apple gets per unit is roughly double what other vendors get, because Apple sells at a premium and has few low cost options. If we take that into account then we can offer the following figure:
• Apple’s revenue share of the US Home PC Market = 9.3 x2 = 18.6%…..(IV)

Why We Should Count Apple Twice?

If you count Apple market share by units, there’s an argument that you should count Apple twice. If you say, for example, that HP has a 20% market share, you are really saying that HP and Microsoft together constitute a 20% share. The 20% is counted both for Microsoft and for HP. If you say Apple has 9.3% you are really saying that Apple Mac and OS X together have 9.3%. So maybe we should count the 9.3% twice, and – lo and behold – when we do that we end up with Apple’s market share by revenue – 18.6%.

In the article I wrote 2 years ago I suggested that, as long as Apple maintained its momentum, it would double its market share in approximately 3 years. At the time Apple’s Global PC Market Share was 3.2%. If its market share grows by 30 percent this year, then that projection will prove to have been spot on (despite the severe business interruption of the 2008/2009 recession) and this time next year Apple’s market share will be about 6.4%, possibly slightly more.

The Upside Potential

That’s the upside potential for Apple. Apple is growing at around 30 percent in the PC market. It isn’t easy to estimate what the ceiling might be on its market share. No-one believes that it will ever reach the 90% area that Microsoft achieved. Even if Apple crushed Microsoft, which seems unlikely, Google’s Android is entering the market and, as Microsoft’s market share diminishes, either Android’s market share will grow or Linux (which is what Android is based on) will be adopted by many of the PC vendors as an alternative OS.

Microsoft’s market share depends critically on being able to keep manufacturers in line and committed to Windows. It was able to do this until Apple started to ramp up. Now that Google is in the game with an OS that costs nothing, Microsoft’s business model is in tatters:

• At the top end Apple is providing higher quality
• At the bottom, Google is providing an alternative Open Source OS and a much cheaper license

If this continues to play out, then the PC market may come to resemble the mobile market; multiple players on multiple platforms with a few dominant players.

The iPad Cometh

However, with the advent of the iPad, the current segmentation of the market into PCs, laptops (mobile PCs), smart phones and other devices (iPods, ebook readers, etc.) will make less and less sense. This will especially be the case as we watch the iPad cannibalize part of the laptop market.

Nobody resists buying a Mac now because “it’s not Windows” and nobody will resist buying an iPad because “it’s neither Windows nor Mac OS X.” They will buy the device that suits their purpose. Some will decide that’s an Android netbook, some an iPad, some a Mac laptop and some a PC laptop. The current segmentation of the PC market and the market share stats it spawns will make less and less sense as time passes.