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Apple Inc. (AAPL) Macbook Hit With “Death of the PC” Virus

Apple inc. (NASDAQ:AAPL)

The death of the PC has become a cliché but Apple Inc. might have been infected too as Macbook shipments continue to fall. In January, the iPhone maker revealed that it would boost its Macbook lineup for 2016. KGI Securities analyst Ming-Chi Kuo was especially confident that the firm would unveil new MacBooks with 20% more CPU speeds before the middle of this year.

Apple inc. (NASDAQ:AAPL)

However, in May, Google’s Chromebook outsold Macs for the first time and it was obvious that Macbook’s dominance was being threatened by cheaper the Chromebook from Google.

Apple falls in pecking order in PC Shipments

Now, the latest report from IDC shows that the Macbook has fallen lower in the pecking order of PC sales globally. IDC reports that Apple recorded 4.4M units worldwide shipments of its Macbook in the second quarter. Now, Apple sits in the fifth position in sales behind ASUS with 4.5 million shipments. Lenovo, HP, and Dell occupy the first three positions with 13.2 million, 12.9 million shipments, and 9.9 million units shipments respectively.

Apple is seeing a significant drop in its Macbook sales and it seems that the firm is fighting a losing battle on many different fronts. The firm’s quarterly shipments are down a massive 8.3% year-over-year. More so, the firm’s market share for computers has dropped from 7.4% to 7.1% year-over-year. More so, the firm’s shipments in the U.S. dropped from 2.06 million units to 1.9 million units and its U.S. market share dropped from 12.7% to 11.2%.

Apple Macbook sales

The IDC observes that the weakness in Apple’s shipment is a function of improved competitiveness from rivals who are making laptops that could compete with Macbooks. More so, many potential Macbook buyers are delaying their purchase until Tim Cook refreshes the Macbook Pro line of products. Hence, it is important that the firm come to the market with spectacular improvements in its Macbook line if it wants to unlock the pent up demand for the Macbook.

Nonetheless, the IDC notes that the drop in shipments of PCs (desktop and laptops) is not peculiar to Apple alone. Worldwide PC shipments were down 4.5% year over year to 64.2 million units in the second quarter. However, the drop was not as severe as the 7.4% decline that analysts had predicted.

Apple must breakout a new product category, and fast

Apple   has been able to stay afloat and profitable with its iPhone line despite the obvious weakness its Macbook and other product categories. However, the iPhone cannot continue to the major profit and revenue driver for the firm indefinitely. The iPhone is already reaching a point of satiation and the new specs (software and hardware) only seem to add marginal improvements to sales.

The firm has a new iPhone in the works but the rumor mill is divided on whether Apple will release the iPhone 7 this year or next year. Many people expects the firm to unveil the iPhone 7 with a glass body,  a screen without bezels, and possibly without the headphone jack. However, analysts have hinted that the firm might want to postpone the release of the iPhone 7 until 2017 to mark the 10th year anniversary of the iPhone.

If Apple goes ahead to delay the iPhone 7 until 2017, there’s little doubt that iPhone sales will slump in the remaining quarters of this year. Many potential iPhone buyers would want to delay making a purchase until next year.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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