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Summary:

Outside the diminutive circles of Mac enterprise IT, the end of the Xserve will hardly be noticed, but perhaps it should. Up until today, there were four categories of Mac desktop, and now there are three. How long before there are none?

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Outside the diminutive circles of Mac enterprise IT, the end of the Xserve will hardly be noticed, but perhaps it should. Up until today, there were four categories of Mac desktop: iMac, Mac Pro, Mac mini, and Xserve. Now, there are only three. The question then becomes whether other desktop product lines might be in danger of discontinuation, or if Apple might move away from the space altogether.

2010: A Predominantly Mobile Year

Before introducing the iPad at the Apple event in January, Steve Jobs defined Apple as a “mobile devices company.” According to Jobs, Apple made more money on mobile devices (including iPods, iPhones, and MacBooks) than companies like Sony, Samsung, and Nokia did on their portable products. For the fiscal year ending in September, that trend continued.

Net sales for Apple were just over $65 billion, of which approximately $50 billion was divided among four portable product lines, with $6 billion going to Mac desktops. Since the iPad was only available for seven months in FY 2010, the Mac desktop will likely be last among Apple’s top hardware earners in 2011.

Notebook vs. Desktop Trends

That doesn’t mean the Mac desktop isn’t earning money. After a disastrous year in 2009, which saw a 23 percent decline in net sales, Mac desktop sales rebounded in 2010, up 18 percent. The problem is, Mac laptops were up 43 percent in net sales for 2010, and that was on top of a 9 percent increase in 2009.

Looking at Mac unit sales puts the net sales into perspective. While laptops started taking off in 2006, desktop sales have seen fluctuations, and even declines, though 2010 was a big rebound year. Nonetheless, Mac laptops represent a strong growth curve for Apple, which, as with the rest of the PC industry, has come at the expense of desktop sales.

Over the last 10 years, Mac notebooks and desktops have more or less switched positions in unit sales. In 2001, 7 out of 10 Macs sold were desktops. In 2009, the reverse was true. For 2010, strong iMac sales pushed the ratio back down to “only” two out of three Macs in favor of notebooks. With the introduction of the new MacBook Air, consumer dollars will swing even more towards the laptop, if analyst expectations prove accurate.

The State of the Desktop

The question then becomes: At what point do individual Mac desktop products reach a point of diminishing sales returns for Apple? The simple answer is that iMacs are safe in the short term. While Apple hasn’t broken out sales numbers for individual desktops since 2005, back then, the iMac accounted for about two-thirds of Mac desktop sales. Since then, comments in Apple conference calls reference only “strong sales” of the iMac, if desktops are mentioned at all, so the iMac’s role in the desktop picture has likely grown stronger still.

As for the Mac Pro and the Mac mini, a lot will depend on whether Apple continues to develop OS X Server. With the demise of the Xserve, Apple is showing it doesn’t really have that much interest in the enterprise back end. Exiting the server software business might make IT enthusiasts recoil, but Apple remains a consumer-focused business. It’s not going to happen next year, but Apple is clearly gearing itself towards a time when the “mobile device company” descriptor is entirely accurate.

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  1. I just made a full switch from PC to Apple at home and work and such news worry me.

    Almost 80% of the media and advertising sector rely on the powerful MAC with its OSX… Hope Apple continues its support for its desktop line

    1. I would be. I did the same thing between 2007 and early 2010, went to all Mac’s at home. Then two things changed my mind, Apple = iOS all the time 24/7 and Windows 7.

      Now I have one Mac that still has Snow Leopard and Windows 7 on it (my 2009 unibody macbook). The rest of them run Windows 7. A dual core Mac Mini with 4gigs of RAM runs Windows 7 64 super nice, especially with the 9400 video card in the Mini I have. The sad thing is it cant boot pure 64bit Snow Leopard.

  2. This switch to laptops coincides perfectly with the development of design programs at universities and art and design schools requiring students to have a laptop (usually a MacBook Pro). At the same time, laptops became more powerful. At the same time, you could suddenly edit a film on your laptop (this was a big fast change). So now film makers and film students have one (versus a big tower at home). At the same time photography became digital and, again, many programs required a Mac. At the same time, Apple released the iPod then the iPhone. University students then people (parents, coworkers?) in general began to see how Apple has nice stuff. But, they might have already had a PC at home or work so, they got a Powerbook/MacBook Pro. Then that old PC was used less and less. Now, they have a MacBook Pro and maybe an iPhone and/or an iPad. There is no need for a desktop Mac for users except those who work in a static place or need the computing power of a MacPro tower. And even then, most can get buy with a MacBook Pro with the creative pros being an exception.
    Regardless, there are just a lot more people who can use all the other products Apple makes versus the limited number of users (but pretty important culturally and in creative fields) who use a desktop.

  3. I was a long-time PC user and I recently decided to switch to a Mac system. I considered getting a MacBook Pro laptop, but I later opted for a 27″ iMac Desktop instead. I love my new iMac with its huge and clear screen, i7 Core processor, 1 TB of storage and 8 GB of RAM. I typically work at my desk all day and it didn’t make sense for me to get something portable like a MacBook Pro, so I may be an unusual case. Nevertheless, I’m glad Apple still works hard on producing great products like my iMac desktop!

  4. This article is sort of jumping the gun and completely ridiculous. Just because Apple dis-continues one desktop now let’s speculate that they might soon drop them all. People read way to much into things. There are way to many people that use powerful Mac desk tops because their profession requires it. Recording studios, graphic design studios, the movie editors. The list goes on and on. My MacBook pro and my iPhone can do alot and are great on the go. Bit in my recording studio my Mac pro tower is my work horse. I know tons of people in the profession’s I listed above and they feel the same. This article is a speculation at best trying to figure out what it all means that they would get rid of one of their desk tops. Not all of us that use macs are writers or students.

    1. I’m sure there are many people in Mac enterprise IT who are saying the same thing about the Xserve. In the end, I think it will come down to unit sales over the next few years, and also whether OS X Server is discontinued.

  5. Robin Barooah Friday, November 5, 2010

    If Apple discontinues their desktop computers, how will developers produce content for their mobile devices? Laptops are good, but most developers I know can never have a fast enough machine or a big enough screen. For that matter what would Apple themselves use?

  6. I have had apple laptops as my home computer for nearly a decade (a couple of iBooks and now a MacBook Pro.

    Over time, my requirements have changed, cloud computing has occurred, broadband bandwidth has not kept up in UK rural communities, and I have got older (think eyesight and back).

    For this reason, I am now considering a Mac Mini (probably server) as my home machine and either a MacBook air or iPad as my mobile machine. In the future, I suspect that data privacy / security will become increasingly important at home as well as at work and that personal cloud computing with a home-based server may become increasingly desirable.

    I would be disappointed if Apple got rid of its desktops.

    I would be disappointed if Apple got rid of its desktops.

  7. > there were four categories of Mac desktop: iMac, Mac Pro, Mac mini, and Xserve

    Wrong. I expect more from a GigaOm “journalist”. The Xserve was NEVer in the category of Mac Desktop. I’m very disappointed in GigOm.

    1. Really. Perhaps I’m misinterpreting the quarterly earnings reports which always include the following footnote for desktops sales: Includes iMac, Mac mini, Mac Pro and Xserve product lines.

      1. Still WRONG. I dont care how they lump those sales, the xserve is a rack mount server. Its not a consumer device, never was. It was NEVER used by anyone as a workstation. Its loud, big and long, and it lives in a computer room/Data center. I know we have a few of them. Basically no different than a Dell R610 1U rack server. Heck they have the same guts, you just pay way more for the Xserve.

        It was a good move. OS X server and the Xserve products are a joke, and Apple never got behind them. The only thing they provide is a way to force settings onto Mac users via an AD/OD golden triangle and polices from OD. Even then the ability is very much lacking compared to Windows, Active Directory and GPO’s.

  8. “Apple is showing it doesn’t really have that much interest in the enterprise back end.” Indeed, because in due time there will be no more enterprise back end – it will be the cloud. The market for server hardware/os will only be of interest for cloud infrastructure providers. The success of Apple will depend on Apple-quality software (as a service), enterprise eco systems and on continuing client build quality, mobility, simplicity and attractiveness.

    1. Really? Everyone will move to the cloud. I guess that is correct, but “the could” will mean still mean the private data center of many corporations. We have looked at cloud option and we use some of them, but the represent maybe 3% of our IT assests? I would say 9 out of 10 times we look at cloud options but we choose to do it on our own.

      The cloud is probably great for consumers, since they dont have IT staff’s at home and only need a DSL line. However you start looking at out sourcing Email for 5000+ users as an example and the increase in data line cost will change your mind in a hurry. Adding a DS3 at 3k a month just to handle email traffic in and out of your company is going to add up real fast.

      I wonder what Apple has in that fancy new Data center? Racks and racks of Mini’s????

      Maybe they run Windows servers for MobileME and iTunes:)

  9. andrei.timoshenko Saturday, November 6, 2010

    On the flipside, if the iPad and the (new) Macbook Air indicate Apple’s vision for the future of its mobile efforts, then having some powerful, static machine at home becomes that much more important.

    The way I see Apple moving, the 17″ MBP is in far more danger than the Mac Pro. Considering that a huge chunk of Apple’s present income comes from product categories that the company did not even have a few years ago, it makes more sense to analyze its future plans based on its (implied) vision of the market than on its present sales.

    1. “having some powerful, static machine at home becomes that much more important”

      I think that statement would be correct if you deleted the “, static” part. The lack of mobility of powerful machines is surely just something that has happened to be the case historically, rather than a core part of their attraction.

  10. Just because part of your business has expanded and increased your profits beyond the other (that STILL MAKE PROFITS) doesn’t mean you should expect it to disappear? Yes, Apple has focused it attention to the mobile market and as such it has seen the benefits. What else would you expect? Your theory doesn’t make sense to me.

    1. Do you think the Xserve wasn’t profitable? If it was profitable, what other reason than low volume would result in discontinuation?

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