Detailed sales figures released by Apple as part of its recent earnings announcement paint a bleak picture of the company’s performance during the last three months of 2000, when unit sales fell by 52 percent from the same period a year before, and revenue from Mac sales fell by 57 percent. The numbers show lagging sales across Apple’s entire product line.
The figures break out Apple’s sales by product for fiscal Q1 2000, Q4 2000 and Q1 2001. During the conference call, Apple revealed that it lost $247 million from operations in the latter quarter, which ended Dec. 30, 2000.
The numbers show major slippage in all product families (see table), compared with both the previous and year-ago quarters. For example, iMac unit sales fell 46 percent from September 2000 to December 2000 — representing a 55 percent drop in revenue — and 56 percent from December 1999 to December 2000, a 67 percent revenue shortfall. Unit sales of Power Mac G4 systems were off 51 percent from the year-ago quarter –representing a 62 percent revenue decline — though the slip from Q4 2000 to Q1 2001 was a less dramatic at 36 percent. PowerBook unit sales were down 43 percent from the year-ago quarter.
It should be noted that the numbers don’t reflect Apple’s inventory reductions. Apple said it reduced inventory by 300,000 units–paring the channel glut from 11 to five-and-a-half weeks–but those units don’t show up in the sales figures. Apple reported about $1 billion in sales, but in the Q1 conference call with analysts, CFO Fred Anderson said the sell-through for Macs–the actual number sold in the quarter–was $1.6 billion. Apple did not provide breakdowns of its inventory numbers by product.
| Q1 ’00 Actual | Q4 ’00 Actual | Q1 ’01 Actual | Sequential Change | Year/Year Change | |
| Product Summary | Units k | Units k | Units k | Units | Units |
| iMac | 702 | 571 | 308 | -46% | -56% |
| iBook | 236 | 89 | 100 | 12% | -58% |
| Cube | 0 | 107 | 29 | -73% | NM |
| G4 | 355 | 269 | 173 | -36% | -51% |
| PowerBook | 84 | 86 | 49 | -36% | -42% |
| Software etc. | – | – | – | – | – |
| Total | 1377 | 1,122 | 659 | -41% | -52% |
Monitors, software and other Apple products made up more than $231 million of Apple’s Q1 2001 revenue, but following the pattern of the hardware products, were off 46 percent from the previous quarter and 57 percent from Q1 2000.
Unit sales of the G4 Cube declined a whopping 73 percent from Q4 2000 to Q1 2001, but given the inventory glut, this doesn’t necessarily reflect slackening demand because many of the sales credited to the previous quarter apparently became part of this quarter’s inventory glut.
Apple’s iBook line partially bucked the trend, with Q1 unit sales increasing by 12 percent from the previous quarter. However, a sales boost was to be expected as Apple refreshed the iBook line in September, and unit sales were about half of what they had been in the year-ago quarter.
The numbers are even more telling when you compare the average real selling price, based on revenue and units sold, between Q1 2000 and Q1 2001. Excluding the G4 Cube, which shipped in July 2000, the average real value of a Macintosh was off by an average of $389.
| Average Product Selling Price (based on unit revenue/sales) | ||||
| Product Summary | Q1 ’00 | Q4 ’00 | Q1 ’01 | year/year change |
| iMac | $1132 | $1038 | $860 | -$272 |
| iBook | $1487 | $1359 | $1460 | -$27 |
| Cube | – | $1542 | $482 | -$1060 |
| G4 | $1991 | $1959 | $1543 | -$448 |
| PowerBook | $2523 | $2302 | $1714 | -$809 |
Looking at Apple’s four geographic segments — Americas, Asia Pacific, Japan and Europe/Africa/Middle East — sales again declined across the board. Unit sales in Europe actually increased slightly from Q4 2000 to Q1 2001, but fell by 42 percent from the year-ago quarter. The Americas were down more than half in revenue and unit sales, but Japan had the biggest hit, down a whopping 74 percent in unit sales and 80 percent in revenue, year-to-year. Overall worldwide, Apple revenue was down 58 percent for the fiscal year.
| Q1 ’00 Actual | Q4 ’00 Actual | Q1 ’01 Actual | Sequential Change | Year/Year Change | |
| Geographic Summary | Units k | Units k | Units k | Units | Units |
| Americas | 708 | 688 | 329 | -52% | -54% |
| Europe, Middle East, Africa | 389 | 224 | 230 | 3% | -41% |
| Japan | 235 | 156 | 61 | -61% | -74% |
| Asia Pacific | 45 | 54 | 39 | -28% | -13% |
| Total | 1377 | 1,122 | 659 | -41% | -52% |
The reaction
“Frankly, I can’t say I’m surprised by these numbers at all, but they do show a much bleaker picture than what has been depicted in the press,” said Kevin Knox, an industry analyst and Apple watcher at the Gartner Group. “They are disastrous.”
Knox noted that Apple’s woes are not limited to the consumer market. “The Power Mac G4s have traditionally been commercial products,” he observed. “They sold less than half of what they did the quarter the year before.”
Matt Sargent, an analyst for market researcher Associated Research Services Inc. (ARS), noted that Apple’s Q1 2001 sales did not keep pace with its price cuts. “If they had kept prices where they were, they would have been in deeper trouble,” he said.
Knox believes that Jobs did not fully think out the positioning of the G4 Cube, resulting in a “tweener product” that’s too expensive for entry-level users, but not powerful or expandable enough for professionals.
Questions of Mac OS X
Knox believes that Mac OS X could be Apple’s crowning achievement for 2001, but he thinks Apple is making a mistake by waiting until July to pre-install the OS on new Macs. “Apple is in a unique position in that it is the only vendor out there that controls the hardware and the software,” he said. “To me there is no reason not to install it on Day One, other than the fact that it’s not going to be ready.”
Knox is also concerned about software incompatibilities in Mac OS X, particularly in the Classic environment, despite beta reports that such problems have been less serious than many had expected. Knox suggested a scenario where a browser can run in native mode, but not all its plug-ins. “If OS X comes out and it’s not running applications and associated plug-ins that people have, people will write it off and no one will adopt it,” he said.
The future
Sargent said he wouldn’t be shocked to see Apple bounce back in the current quarter with a strong revenue period, but he is doubtful. “The new products look good and there is built-up demand for (Apple) products,” he said. However, “realistically, I think they will continue to lose money for another two quarters. They dug themselves a hole and it will take time to dig out of it. But, they will dig out of it.”
Knox is concerned that Apple’s recent product announcements won’t be enough to help it through a slow quarter. “They still face a number of major, major issues,” he commented. “Most of all, they are selling into their installed base and not expanding it in any way. When you do that, you’re going to see numbers like this. The March quarter that we’re in right now is historically Apple’s worst quarter, so I think it’s going to get worse before it gets better.”
He said he doesn’t see anything in Apple’s current lineup that will reel in Windows users. And referring to reports that Apple plans to introduce iMacs with CD-RW drives, he said that Apple needs a total redesign of the iMac, and merely adding a CD-RW drive won’t qualify as “refreshing the line.”
“They haven’t refreshed it (iMac) often enough,” he said. “You own a blueberry iMac. You’re not going to go out and buy a new one because Ruby is available. You have to have meaningful change to entice customers to buy and Apple hasn’t done that in many instances over the past year.”