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Tue Aug 24, 2010 3:59 am

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Mac Q2 Enterprise Sales Surge Past PCs, but Is it Sustainable?
Tuesday, August 24, 2010

It was a good quarter for PC sales, but a great quarter for Macs. Mac sales in business and government saw their biggest increases ever in the quarter ending in June, outstripping growth of the general PC market. According to Needham & Company analyst Charles Wolf, as reported by AppleInsider yesterday, Mac sales to enterprise jumped 49.8 percent, three times the 15.7 percent of the PC market. Mac sales to government surged a whopping 200 percent, 16 times the 12.1 percent growth of the market. Mac sales in enterprise grew faster than Mac sales to homes, Apple's traditional stronghold. Why this happened is likely due to a convergence of a number of factors.

"One of the things that's happened in the 2nd quarter is that businesses started spending money again," said Reid Lews, president of Group Logic, a maker of enterprise-Mac integration software.

But it begs the question of why business and government are buying more premium-priced Macs at a time when worries about a slowing economic recovery dominate the business pages. Or why large sites accelerated Mac purchases in spite of the fact that Apple doesn't have an enterprise strategy. Or whether this is the beginning of a trend or just a quirk.
There are some indications that the acceleration of enterprise adoption of Macs will continue. A soon-to-be-released survey by the Enterprise Desktop Alliance (EDA) predicts that Mac market share will continue to grow through next year, based on respondents' purchasing plans. An EDA spokesperson said that the survey showed Macs in enterprise at 3.3 percent in 2009, but growing to 5.5 percent in 2011 larger businesses that average 600 personal computers. EDF will release survey data in September. (Market analyst IDC put the Mac's market share in June at 3.5 percent.)

Other than a few specific features, such as Snow Leopard support for Exchange Server, Apple's products and marketing efforts have never been aimed specifically at enterprise. But a growing number of enterprise software developers may be creating enterprise features -- and the marketing of Macs -- for Apple.

Frank Cabri, the vice president of marketing at Centrify, a developer of Active Directory integration solutions, said that third-party developers are enabling businesses to incorporate Macs into their IT systems. "Enterprises are finding it easier to overcome barriers to acceptance and integrate, secure, and manage Macs from IT."

The same is true with features aimed at government agencies, such as Thursby Software's Mac support for DOD Common Access Cards (CAC) and Personal Identity Verification (PIV).
But now, more enterprise software developers are adding Mac support to the products, and are promoting these features, to Apple's benefit.

"Before last year, [enterprise software developers] said the Mac isn't a big enough market to justify a product offering" said Lewis. "Now they're saying that if they don't have a Mac product they can't sell their Windows product."

Another factor for accelerating growth of Macs in business and government may be the so-called iPhone halo effect, the idea that large numbers of iPhones in enterprise are making Apple Mac hardware more acceptable to IT departments. During the second quarter, the halo may have expanded to include iPads. With over 3 million iPads having shipped as of June, iPads are now in the hands of chief information officers. Could the iPad be another factor influencing Mac sales?

"Totally," said Lewis. "The halo factor is part of what's happening. [CIOs] see that it talks to Exchange Server and you don't need to call IT. With PCs, they see they're paying a staff of people to manage them."

Whether Apple, or the PC industry as a whole, can sustain this growth depends largely on what happens with the "unusually uncertain" outlook for the economy, as Federal Reserve Chairman Ben Bernanke told Congress in July. Market analyst IDC said on Friday that although second quarter microprocessor shipments where higher than those in the first quarter, demand for processors is weakening.

"Major OEMs cut PC build orders with their contract manufacturers who, in turn, have cut orders for commodity components," said Shane Rau director of Semiconductors: Personal Computing research at IDC. "While the PC processor vendors re-iterated their solid outlook during their most recent earnings calls, the softness we've seen ultimately makes us concerned for end demand's pull on processors...2011 remains a wildcard in terms of sustainable unit growth."

John Rizzo

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Simplifies the installation, configuration, and management of Apple's OS X Server software. Support Mac and Windows clients for file sharing, email, and directory services; Install software to your iOS devices and Macs. Incorporate a Mac subnet into a Windows Active Directory domain, manage Mac and Windows clients, and configure security options, and more. Click here for more.

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