Good article, but it does not provide information about Apple. How many people work for Apple in the US? Who should be laid off? if my guess is right, the manufacturing is mostly abroad in China and US manufacturing is almost completely computerized with only a handful employees in the factories. Therefore, if sales drop, most of the layoffs will be in China, which and we would not know about.
The Apple stores are lean and as new ones open, existing staff may be relocating to fill some of the higher positions, instead of being laid off. Apple is high quality product, no rebates or discounts shall be applied to existing products, except for outdated and not manufactured goods on hand to keep profit margins high.

Joe, Go back to college.
You need to look at margins as well as numbers to make some sense of the recent position. Do you really think Acer is making the same margins on its notebooks as Apple does on its Mac line?
And if you are writing a column called 'Apple Watch' then shouldn't you be factoring in all the OS X products not just those that have Mac in their name? How about all that deferred revenue that is flowing through from the iPhone?
Come on, Joe, get a sense of perspective for goodness sake!

An interesting article. But it is wise to remember that Apple provides a differentiated product that can not be easily substituted. That applies to the target market - "most people" do not matter as Apple has decided not to serve most people. To many in the target market there is no substitutable product and they will probably defer their computer purchases.

Customers in the target market perceive that products from Apple offer them better value or value that can not be found from other product offerings. These are the people that Apple must nurture during the recession as they will drive sales after the recession. Also, they will be key to revenue during the recession. They are less likely to buy a computer during the recession, but they are relatively more likely to buy other hardware and software during the recession. The recent bundling of iLife, iWork and Mac OS X is an example of Apple trying to encourage existing customers to spend during the recession.

In summary, too many analyses for into the trap of assuming that Apple target the same market as other computer vendors or view the computer market as homogeneous or both. Recognising that neither are true allows one to better understand Apple's strength - focus.

Numbers doesn't mean profits besides you didn't say much revenue about iTunes, App Stores, iPhones and iPods/Touch.

Why don't you do a more in depth study and then give us the figures.

BTW Apple has an opening for someone who can run the company why don't you apply and show us how good you will be at giving great numbers to the investors instead of cheap talk.

As usual comments about Apple are riddle with errors.
I really can not understand the kind of analysis that you have done here.
Traditionally Apple sells less computers in the December quarter than in the September quarter, when there is the "Back to School" sale.
Therefore, the fact that Apple sold less computers in Q1 than Q4, should not come as a surprise. What should come as a surprise is that Apple, in spite of all the errors that you point out, and errors that I could point out as well, sold in this recession riddle quarter more computers than it sold in the booming Q1 of last year! Is this important? You bet.

Look at the numbers you posted, the 35% increase in Acer and Toshiba might be the missing numbers in HP and Dell. So Apple really increased its market share during the bad times while selling more expensive computers than the other manufacturers. Is this reason for concern? I'll let you answer that.
Acer cannibalized its and other PC makers sale with a cheaper computer, and this seems not to affect Apple.

About 2 days ago it was in the news that Apple was hiring engineers to work in the 3.5G or 4G phones. Hiring, not laying off.
Now, I do hope that Apple come to its sense and offer the current line of Mac mini at a significantly discounted price. I see no reason why it would not do so, since it is already a stale computer, it has not been updated for far too long.
Contrary to what people have been saying, Apple has all the momentum it needs, sale in iTunes music store and iTunes app store are booming, The iPhone and the iPod Touch, plus anything else that is in the pipeline. And electronics today are not fancy gadgets, they are part of your life and work. One can not just decide not to buy them.

Apple had a fantastic quarter when computer sales is considered, any other take in this quarter sale is sensationalistic news to get attention.

Joe -- Interesting article. The only point I'd like to make is that Apple already has a "mini" notebook, the MacBook Air. It has a low-speed processor, no optical drive, fixed RAM, non-removable battery, low-end disk drive, no ethernet, and a single USB port. It weighs only 3 pounds, just a tad more than a netbook, but then it's got a full-size keyboard and 13" screen. Unfortunately, Apple chose to price this as a premium item rather than to compete with the coming netbooks.

Of all the MacBooks, the prices for the Air have come down the most on the refurb/closeout/overstock market. While most other models of MacBooks see drops of 10-20%, the Air discounts are 25%-50% off.

Perhaps Apple is starting to see that they positioned the product incorrectly given the economy and the new netbook competition? I don't know, I'm just asking...

Im quite impressed with the great analysis in the the comments above. After reading this article I was all set to launch into all the problems with it, only to find topchat, Tristan Krautz, David, AdamC, and Alphaman covered it all.

Thanks!

I agree with the comments so far: one further one. no company should lay people off whilst making profits - Apple will have to grow emplyment when the bust ends so why not keep people and have experience employees when that happens? ( although I agree that people can be let go in underperforming areas only). i dont think that Apple will be in the red in any quarter in this recession not least because of the way they amortize earnings on the iPhone, and because the iPhone itself still has momentum and is not even seling in all the countries it could. So no need for layoff, and *even* if they had a bad quarter no need then either - there is money in the bank and no debt. Apple is safe. Get a job in Apple.

If anyone was listening during Apple's last conf call they would remember this topic coming up indirectly. Basically Steve Jobs said he planned to beef up R&D to have great products ready when people start loosening up their wallets. It was even jokingly suggested that he might wish use some of that 25B$ to hire ALL available software engineers in silicon valley. I suspect this is not likely to happen but I equally suspect he'll take this opportunity to go snatch away top talent while they're in play.

I'd like to make a few points. First, what killed PC companies like Dell and HP was that they were competing by dropping prices and cutting margins. The result was they made a lot of sales, but it probably took two or three sales to make what Apple makes on a Mac. Those companies rely on people upgrading the advertised order. Apple, however, has never in recent history had to significantly sacrifice margins to move product. So, just because Acer is moving a lot of product relatively means very little if you don't know how much profit it is making on each sale. It also doesn't mean very little if you don't know who the sales are being taken from. I doubt it is Apple.

Second, I honestly don't believe Apple will do a Netbook unless it seriously looks like those are a threat to it's business. Jobs has already said Apple could build a $500 notebook, but like other such Notebooks, it'd be junk. According to him, Apple isn't interested in competing in the junk computer market. Why would Apple if it is already doing fairly well in a bitter economy?

Third, I think the iPod Touch has potential to be Apple's Netbook. There are already rumors that Apple is going to significantly upgrade the processor. With a slightly bigger screen, I could use one to replace most of my computer tasks. It already lets me get my email, surf the net, store my contact, view contact info, run applications. It does all that for a little over two hundred dollars.

So while Dell and HP got shellacked year-over-year selling netbooks AND lowered their margins significantly across the board Apple did neither and increased its sales year-over-year. Hope may not beat gravity but fear doesn't undo sales either.

What is not mentioned here is that US Mac sales typically fall from Q4 to Q1 while European Mac sales usually do the opposite.

That is not to say that 2009 won't be a tough year for Macs, especially with Windows 7 coming out to good reviews, but the case hasn't been made with these numbers yet.

I think if Apple sells a low-cost notebook/netbook it will cannibalize profits that it gets from Macbooks. It's not that they couldn't produce such a computer it's that they don't want people to have an option for OS X with less margin than a Macbook.

Umm,

Apple, the last few years, has been growing faster than botulism in a salad dressing factory.

The recession will undoubtedly affect Apple, but it will affect it first by slowing its growth.

Professional journalists will look for evidence of stagnation, not yet observed, before they start screaming about potential contraction.

Also, they have $24b in the mattress. They would pull out a little of that before they close the doors, I'm guessing.

Joe,
for many of us the iPhone is all the "netbook" we need. You need to look at the whole company, not just Mac sales before you predict doom. Market share is almost as misleading and useless as megahertz was in comparing computers. Look at the big picture, not just one trend in isolation from the rest.

The business world and this writer does not understand Apple's model. Apple is a consumer electronics company with a solid product line that people want. Stop comparing Apple to Dell, HP, or even Microsoft. Steve and his team has developed Apple Inc. a model many American companies need to follow.

Doom! Gloom! What to do??? Of course the economy will affect Apple. Will they lose market share? Maybe, maybe not. However market share is not just comparing netbooks with little profit margin to real computers with profit margins built in. Like everyone else Apple will suffer but they won't solve their problems by selling their wares for little profit. Unlike Dell who seems to be after marketshare Apple wishes to make profits. Is that a bad thing?

The sarcasm about Steve's health, is a very low cheapshot. I will no longer read this blog.

Overall, the market is down. That's for sure. However, as others have mentioned, the low margin Netbook numbers are skewing results in favor of companies like Acer, etc. However, I'd like to see a follow up as to how this is helping their bottom line.

Apple is not competing in the Netbook market and probably for good reason. Netbooks would likely cannibalize the sales of higher margin products. This is what's happening on the PC side. Further, it's unlikely that an Apple based Netbook would really bring new customers to the platform. If you're going to buy a Mac, you buy a Mac. If you're going to buy a PC, you buy a PC. So, let's see a profit analysis by company to determine who is taking the correct course of action, rather than simply relying on PC shipments. The fact that Apple is experiencing year over year increase in shipments while only selling higher margin products says quite a bit.

Overall, the market is down. That's for sure. However, as others have mentioned, the low margin Netbook numbers are skewing results in favor of companies like Acer, etc. However, I'd like to see a follow up as to how this is helping their bottom line.

Apple is not competing in the Netbook market and probably for good reason. Netbooks would likely cannibalize the sales of higher margin products. This is what's happening on the PC side. Further, it's unlikely that an Apple based Netbook would really bring new customers to the platform. If you're going to buy a Mac, you buy a Mac. If you're going to buy a PC, you buy a PC. So, let's see a profit analysis by company to determine who is taking the correct course of action, rather than simply relying on PC shipments. The fact that Apple is experiencing year over year increase in shipments while only selling higher margin products says quite a bit.

you neglect to consider the international implications of the apple expansion

all those apple stores, half of them outside the US!

income per sq.metre is higher than any other retailer
a few facts can easily lead to a different article, though not so many responses

the blog is after all about getting readers and repeat readers
this particular story appeals to both mac and PC zealots..

not quite a waste of time..but getting closer

..it's time to stop childish actions..

mature analysis may be one place to start!

There is better commentary in the posts than in the article. But this is hardly surprising. The market crashed in October. By all rights Apple Q4 should have been bad, because EVERBODY ELSE'S numbers are bad. So the logical thing to do when doom and gloom didn't work for the last quarter, which negatively affected the economy but not Apple, is to say THIS QUARTER will be the one that drags Apple down.

But as others have already pointed out, 28 billion will cushion a pretty big fall.

I guess my point is that if Apple managed to put 3 BILLION in the bank in a quarter that shook even the mighty Microsoft, predicting doom for Apple in this next quarter based on no data is just typical Apple bashing and an attempt to minimise their Q4 09 achievement.