Future Implications: Apple's complete home dominance
I understand 5.6 percent is not too significant, and the nation's top vendors are releasing Windows systems, but Apple's rise in market share has been unprecedented.
In a report that is guaranteed to make Apple fanboys proud and Apple haters scoff, the market research firm IDCclaiming that Apple has officially become the third-largest computer vendor in the United States.
According to the study, Apple shipped 960,000 units in the second quarter of 2007, and the Cupertino, Calif.-based company now commands 5.6 percent of the U.S. market--a jump of 0.8 percent from the same time last year.
On the Windows side of things, Dell, while still firmly entrenched as the nation's No. 1 computer vendor, witnessed an 11 percent decline, and HP, the country's No. 2, enjoyed 26 percent growth.
So what do all of these numbers mean to the average consumer? Not too much. But if we were to take a more well-rounded view of the news, one thing immediately comes to my mind: Apple is well on its way to dominating the home.
I understand that 5.6 percent is not too significant, and the nation's top vendors are releasing Windows systems, but Apple's rise in market share has been unprecedented. Just one year ago, Apple shipped only 761,000 units in the same quarter. With more than 200,000 additional computers sold this year, think of the extreme revenue benefits that will filter down to other product lines.
And it is this filtering that will make Apple the most dominant consumer electronics company in the world. Bold predictions? Not if you take an objective view at what is currently happening in this industry.
Slowly but surely, Apple is creeping its way into every area in the industry. While it may have started with computers, Apple is quickly becoming a multifaceted company that owes much of its success to its multimedia devices. If we were to throw the computers out for right now, would it even matter? Wouldn't you still think highly of the design and usefulness of Apple products?
Apple dropped "Computer" from its name because it's no longer just a computer company. In fact, I would venture to say that computers have become a bonus revenue getter for the company.
A simple look at the company's most recent Securities and Exchange Commission filings will show you that just iPods and iPod-related products account for more than 50 percent of the company's net sales, and that's before the Apple TV and iPhone are included. And while the Macs sell well, they used to be the only source of income for the company.
Our future homes will be dominated by Apple. And while I'm not convinced that the majority of homes will have Macs, I do believe that many of them will. Apple has realized that computers are no longer the bread and butter of this industry, and it has capitalized on some of the devices that are: digital-audio players, cell phones and multimedia devices.
Margins in the computer industry are difficult to maintain, and more often than not, you will find companies struggling to keep up with the larger firms. Try to start your own computer-manufacturing business, and chances are, it won't last if you're not providing a unique experience.
But the other industries mentioned above are not the same way. As Apple has shown, a company can make a significant profit on cell phones, digital-audio players and multimedia devices because they're what captures our attention right now.
Computer innovation can go only so far--there are technological and design limits. Multimedia devices have no such limit. While we still can't beam our favorite artists to our homes for a live concert, we can have products that offer entirely unique experiences. Simply put, computers are computers, but home multimedia devices can be anything.
So when will this Apple home of yours come to fruition? Well, my guess would be in about 15 to 20 years. If nothing else, we have learned that Apple knows how to take the industry lead and not relinquish it. And while I think there will be a significant void to fill when Steve Jobs finally retires, the company will continue its trek toward dominating every consumer electronics industry within the next couple decades.
But while Apple will become the most powerful consumer electronics company, that doesn't necessarily mean that its domination will last long. Much like every other company that has dominated an industry, people will begin to hate it.
Right now, there is a very loving relationship with Apple, as more and more people believe that it's the savior this industry needs. When it becomes dominant, though, that relationship will become one of both love and hate--we will love to play with the products, but we'll hate the fact that no other company can compete. The entire consumer electronics business will be like the MP3 player industry: Apple will wield significant control, and other companies will need to play catch-up.
This is not to say that no other companies will exist; that Apple will be the last man standing. What I am saying is that Apple will be the most dominant force in the entire business. The Microsofts, Googles and Sonys of the world will still be around, but despite whether we like to admit it, Apple will soon become the most successful consumer electronics company.
Adults both young and old love Apple products, but the majority are people in their 20s. As they get older, make more money and have families, which company do you think they will turn to first for all of their home and travel needs?
It may not happen over night, but trust me, the heyday of Apple hasn't even begun.
Every Thursday, Don picks a current-events topic and discusses how it will impact us. Check out more from Don's Future Implications series.