5 reasons Macs will never outsell Windows PCs

5 reasons Macs will never outsell Windows PCs: "

By Joe Wilcox, Betanews

Apple may be the most talked about tech company in geekdom and on Wall Street. The brand is hot, but for all the hype Macintosh is not. Sure Mac sales are way up, as is Apple's personal computer market share -- at least compared to May 2001 when CEO Steve Jobs talked about topping 5 percent share when opening the first company-owned retail store in McLean, Virginia. Ten years later, Jobs' has his 5 percent, but Windows PC sales dwarf Macintosh, and there absolutely are no signs of change coming anytime soon.

During fourth-quarter 2010, Apple's PC market share fell sequentially, dropping to fifth place in US market share -- from third place according to IDC (10.4 percent to 8.7 percent) and from fourth by Gartner's reckoning (10.6 percent to 9.7 percent). Combined Windows PC market share is still about 90 percent, and let's be brutally honest: Windows PCs are used pretty much everywhere.

Last week, DisplaySearch joined Canalys classifying iPad as a personal computer. Canalys claims that iPad lifts Apple to third place in global PC market share. DisplaySearch puts Apple No. 1 in the United States by similar reckoning. As I explained earlier today, iPad is not a PC. Canalys and DisplaySearch are both wrong to classify iPad as a personal computer. I make the point proactively before someone comments that Macs already outsell PCs. To further emphasize: Apple separates iPad from Macs in its quarterly accounting of product sales. By that measure, if Apple doesn't count iPads with Macs, neither should you.

With that clarification out of the way, I present five reasons why Macs will never outsell Windows PCs, globally, in no particular order of importance.

1. Macs cost too much. Naysayers will be quick to answer this one in comments with Mac and Windows PC feature and price comparisons, which perhaps are okay for buyers in mature markets. But the majority of the world's population lives in emerging markets, like BRIC (Brazil, Russia, India, China), where price makes the Mac unattainable for most people. For example, per capita income in China is around $4,000 a year, depending on source of information (CIA Fact Book, International Monetary Fund or Word Bank, among others). Brazil: $9,800 a year. Russia: $9,900. Twenty percent of citizens in the Russian Federation live below the poverty line, according to the International Monetary Fund. Based on US Mac pricing, the realistic entry price is $999 for either the MacBook or MacBook Air. Who is going to spend 10 percent to 20 percent of their annual income on an Apple computer?

International Mac prices are not comparable to the United States. Prices tend to be much higher. For example, in China the MacBook Air is 7,998 Yuan, which is about US $1,216 at today's exchange rate. Same computer, in Brazilian Real, is 3,099, which is about US $1,865. Of course, even among the poorest nations there are upper echelons that can afford these prices, and it's true that almost 60 percent of Apple sales are international. However, the majority can't afford Macs, and the rise in international sales are more about iOS devices than Macs.

By comparison, Windows PCs can be purchased in most any geography for just a few hundred dollars, either from global companies like Acer and HP or local resellers.

2. People can pirate Windows. One of Windows' biggest cost advantages is piracy. People can and often do steal the operating system, particularly in emerging markets. Although steal is a loose definition. The software is often purchased, for price acceptable to the local economy and from someone who is a pirate by Microsoft's definition. However, the buyer likely made a good-faith purchase.

Piracy, whether Windows or software running on it, gives Apple grave competition. According to Business Software Alliance, piracy rate in China was 79 percent in 2009 (2010 data won't be available for several months). Brazil: 56 percent. By comparison, the United States was 20 percent. The top five -- Armenia, Banglidesh, Georgia, Moldova and Zimbabwe -- have piracy rates above 90 percent. Not coincidentally, they're all relatively poor nations, with annual average per capital incomes ranging from about $500 to $2,700.

Because Apple controls both hardware and software, piracy is significantly less effective in bringing down Mac prices. Apple sells hardware and software bound together, which isn't true of the Windows PC ecosystem. It's easier to pirate Windows and install it on a vanilla machine than it is Mac OS. Perhaps in the future there will be a market for Mac clones, running pirated software, but there isn't one today. So this point relates to the first: Most people on this planet can't afford Macs.

3. Windows ecosystem is simply too large. Microsoft executives like to talk about the importance of the Windows ecosystem of PC OEMs, peripheral manufacturers, software developers, system integrators and more as being foundation for the company's success. They participate in the ecosystem because it makes them money. Successful platforms share five attributes:

• There are good development tools and APIs for easily making good applications


• There is at least one killer application people really want


• There is breadth of useful applications


• Third parties make lots of money


• There is a robust ecosystem

The latter two are intertwined. No ecosystem thrives if third parties aren't profiting. Apple's Mac ecosystem is much smaller for many reasons but I'll call out two:

1. Apple doesn't license Mac OS X, which limits how widely the supporting ecosystem can grow. Only Apple ships Macs.

2. The established Windows ecosystem infrastructure is simply too large. Microsoft has a robust monopoly in PC operating systems.

Apple is trying to build its own ecosystem, around iOS and supporting devices iPad, iPhone and iPod touch. Not Macs.

4. Windows shadow ecosystem is profitable, too. There also is a shadow ecosystem that profits from Windows through malware and activities that steal people's credentials and subvert their computers as part of botnets. This thriving ecosystem contributes to software piracy. Malware writers and cybercriminals have huge interest in keeping Windows and supporting software thriving; some estimates put online crime costs to businesses and consumers at about $1 trillion. Perhaps a shadow ecosystem will develop around smartphones and tablets (we can only hope not), but it's mostly about Windows today.

In January, McAfee released report 'A Good Decade for Cybercrime,' which is an excellent primer on the topic. LOL, McAfee and other security vendors also profit from the shadow ecosystem, feeding off malware parasites attached to the Windows platform.

5. Windows owns the enterprise -- and Apple isn't even trying. As long as businesses the world over run on Windows PCs, there's limited headroom for Mac share growth. Even if Apple seriously tried to break Macs into the enterprise, the supporting Windows ecosystem and cost of switching platforms would prohibit serious defection. Until something different comes along, the Windows PC will rule enterprise computing.

Would you like to add other reasons? Please offer them in comments.

Copyright Betanews, Inc. 2010