Friday, February 20, 2009

Apple hits a bump on the road

For the first time in a long time -- three years actually -- sales of Apple computers declined for a given month. According to an article Wall Street Journal (Online Edition), the company's market share of PCs, measured in units, declined to 13.7% in January 2009, as compared to 16.4% in January 2008. The article indicated that unit sales of all brands of PCs rose 13% in January from a year earlier, but the dollar value of systems sold fell 3.2% as consumers bought less-expensive models. Hewlett-Packard Inc. had the strongest showing in the month, with a January 2009 market share of 40.1%. This is up from a 39.2% share of market one year earlier.

Apple may have to rethink its premium pricing strategy, at least in the consumer desktop space. Commercial users of Apples will pay the premium in order to get the required functionality, especially in their traditional stronghold of ad agencies, graphic design shops, and video production houses. But if Apple is serious about making a real dent in the consumer market, they will need to come up with a cost-conscious pricing model that reflects today's realities.

Apple, Inc.: APPL (NASDAQ)
Hewlett-Packard Company: HPQ (NYSE)
WSJ Article: Apple Stumbles on Price Pressure

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